mon economic assumptions
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Bellringer1. Why did you choose to take this course?
2. What other advanced courses have you taken during high school?
3. If you weren’t here right now, what one thing would you be doing right now?
Notebooks Write your name in/on it Stickers or décor ok!
Back: Reverse, non-alpha glossary
Show slideshare and wordpress
Opportunity Cost• Next best option• What you gave up to be here• “I don’t get paid to be here”.
What is economics?• Study of how people
make choices
• You made a choice by coming to class today
• But that choice also has a cost
Economics• People face trade-offs
• Hundreds of choices each day
• Every choice means you refuse something else
• Examples?
What is economics?Humans have
limited resources and unlimited
wantsEconomist
Enlightened Philosophy
Alan Greenspan
Ben Stein
$1 prize:only President with economics degree
Greg Mankiw
#1 People Face Tradeoffs Choices Can’t do
everything
Limits on life?
Examples?
#2. The Cost of Something is What You Give Up to Get It.
Opportunity Cost Next best option Next best trade off Other examples?
3. Rational People Think at the Margin
• Cost benefit analysis• Video clip• Benefits?• Costs?• Other examples?
http://www.yadayadayadaecon.com/clip/7/
4. People Respond to incentives
Positive incentivesCarrots
Sunnyside laptopsCollege ScholarshipsOther examples?
Negative incentivesSticksLaws
5. Trade can make everyone better off
• Gain by profit• “Buy low, sell high”• Utility• Test it?
Value, in economic terms
2 ways economists measure value of a good/service:
1. Price – (How much are you willing to pay?)
2. Utility (how happy does this make me?)
Paradox of Value• Some items have low prices and high
usefulness (water)
• Others are almost useless, but have high prices (diamonds)
Assignment, due next Monday 8/12/2013
1. Acquire the Mankiw text, either paper or electronic version
2. Read page “How to read this book” -2 easiest and why, 2 new ideas and why
3. Write a worksheet or lesson to teach regular students about opportunity cost & marginal analysis
Can be the same paper or electronic: [email protected]