Folks the mandatory reading for lesson 5 is Hidden Order pgs 41-48 (up to Economics and time) & 54-60. The optional reading is the Supplement (found here: \\AFAEDUFS10\cadet-data\DF\DFEG\Economics\Econ201\Fall 2013\Balser) pg 1 and 11-25. In lieu of the traditional journal questions your questions for next time are:
Today we laid out the framework for our model...remember models simplify things so that we can draw conclusions. In particular when incentives (or prices) change what effect will that have directly and indirectly on lots of different markets? you all worked some of this out in the corn example and seemed to understand that prices were conveying information about costs, benefits, scarcity, incentives and the effect that changes have on equilibrium and efficiency or how we allocate those scarce resources with alternative uses when things change.
We also talked about opportunity costs...remember it is the next best alternative and costs aren't just about money. Also think about what happens to opportunity cost as you spend more time doing something...if i watch one movie what is the cost? if i watch a second was the cost more or less? why?
1. Explain the definition of marginal value in your own words. An example may be helpful.
2. How is marginal value different than demand? How is it identical? (or Marginal cost different from supply)
3. How is marginal value different than price? When is it the same? (or marginal cost different from price)
4. Explain the definition of consumer and produce surplus in your own words. An example may be helpful.
5. David Friedman states “water is far more useful than diamonds, and far cheaper.” Why?
You may discuss with others, but your response should be unique to you. Please remember to document your work.
Today we laid out the framework for our model...remember models simplify things so that we can draw conclusions. In particular when incentives (or prices) change what effect will that have directly and indirectly on lots of different markets? you all worked some of this out in the corn example and seemed to understand that prices were conveying information about costs, benefits, scarcity, incentives and the effect that changes have on equilibrium and efficiency or how we allocate those scarce resources with alternative uses when things change.
We also talked about opportunity costs...remember it is the next best alternative and costs aren't just about money. Also think about what happens to opportunity cost as you spend more time doing something...if i watch one movie what is the cost? if i watch a second was the cost more or less? why?
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