TODAY’S MENU: Wednesday 15 January 2025
I. BUSINESS
A. Practice (Thinking) Problems
1. “Questions and Exercises” section at end of textbook chapters
a. Answers in “Practice Problem Answers” document on Moodle
2. Chapter 1: 2, 4-6, 9, 10
B. Recitation sessions DO meet today/Friday
1. See page 2 of the course syllabus for days/times/locations.
II. SUBSTANCE
A. The basic basics
1. Microeconomics
2. Macroeconomics
a. Consequences?
B. Economic reasoning: the basics
1. Benefit: What you get
2. Opportunity cost: What you give up
a. Benefit from the best alternative not chosen
3. Rationality
a. Do something if Benefit ≥ (opportunity) Cost
4. Total vs. marginal (small incremental changes from doing one
more unit of something/buying a third, fourth, and so on…)
a. Either/Or decisions
b. How much/How many decisions
C. Examples of Economic Reasoning
1. A question – Would it ever make sense to stop doing something
profitable?
2. Either/or Choices
a. Relevant benefits, costs: Total
b. Examples – Jazz fest (paid price, now you choose which stage.
Already paid for ticket, that money is gone, now you choose the stage.)
3. How much/many Choices
a. Relevant benefits, costs: Marginal
b. Examples – Produce 100 units vs 101;
4. The answer – Yes, if you are stopping so that you can do something
more profitable
D. Brief note on graphing: Appendix to Chapter 2
E. Opportunity Cost Application: International Trade
1. Questions to Answer
a. If “workers in the United States are the most productive in the
world,” why do we consume so many imported goods?
b. If “trade can make everyone better off,” why is there so much
opposition to it?