TAILIEUCHUNG - Lecture Principles of microeconomics - Chapter 2: Some common pitfalls for decision makers

In this chapter you will learn about some typical reasoning problems people have when they make decisions. You will learn that the most important cost to consider is opportunity cost, and that marginal cost should be used when applying the cost-benefit principle. | Some Common Pitfalls for Decision Makers Slide 2 - What is Chapter 2 about? Slide 2 - Pitfall #1: Ignoring Opportunity Costs Slide 2 - Opportunity Cost The value of the next-best alternative that must be forgone in order to engage in a particular activity Slide 2 - What’s “Free”? Using a good we already own is not free could be sold in the marketplace instead possible sales proceeds = opportunity cost Ask yourself – what am I giving up ? “Should I iron my shirt OR watch the end of the movie? Not just, “Should I iron my shirt?” Slide 2 - Opportunity Cost Over Time Pay Now or Pay Later ? You are always better off if you can delay payment – unless you have to pay interest Delayed payments mean $ can be invested (and earn interest) in the meanwhile Opportunity cost of paying now, instead of paying later, is foregone interest Implication: paying a dollar a year from now is not the same as paying a dollar today Slide 2 - Suppose you win the lottery Would you prefer

• Kinh tế học
• Principles of microeconomics
• Lecture Principles of microeconomics
• Market imperfections
• Labour markets
• Opportunity costs
• Time value of money
• Ten principles of economics
• Scarce resources
• Scarcity implies choice
• Choice implies cost
• Thinking like an economist
• Economic models
• Circular flow diagram
• Production possibilities frontier
• The gains from trade
• Production possibilities
• Comparative advantage
• Absolute advantage
• Market forces
• Supply and demand
• Market economies
• Competitive markets
• Price elasticity of demand
• Price elasticity
• Midpoint method
• Demand curves
• Controls on prices
• Price ceiling
• Price floor
• Market outcomes
• Market failures
• Negative externalities
• Positive externalities
• Market inefficiency
• Public goods
• Common resources
• Types of goods
• Cost benefit analysis
• Tax system
• Federal government
• Marginal tax rate
• Budget surplus
• Costs of production
• Total revenue
• Total cost
• Firms in competitive markets
• Average revenue
• Marginal revenue
• Sunk costs
• Monopoly resources
• Government created monopolies
• Natural monopolies
• Monopoly’s revenue
• Monopolistic competition
• Nash equilibrium
• Equilibrium for oligopoly
• Game theory
• Long run equilibrium
• Perfect competition
• Production possibility frontier
• Opportunity cost
• Rational people
• Indirect effects
• Law of demand
• Factors change demand
• Law of supply
• Market demand
• Demand intersect
• Demand determine prices
• Change in demand
• Change in supply
• Elastic demand curve
• Policy analysis with supply
• Policy analysis with demand
• Wealth creation
• Production cost
• Total surplus
• International trade
• Additional benefits of trade
• Average costs
• Break even price
• Increasing marginal costs
• Long run analysis
• Firms profit graphically
• Accounting profit
• Market effectiveness
• Monopolist pricing
• Price discrimination
• Antitrust laws
• Disruptive innovation in oligopolies
• Predatory pricing