1 Welcome to Economics
1.1 Introduction
Review Activities
1.1 Vocabulary
Problems
No problems for section 1.1.
External Resources
Crash Course Economics #1: Intro to Economics
1.2 The Individual and the Decisions they Make
Review Activities
1.2 Vocabulary
Problems
Problem 1.2.1: You decide to enroll in college at Behrend State College. For each year, your tuition will be $25,000, room and board will cost you $10,000, and other supplies will cost you $3,000. By attending college, you have to turn down a job offer that would have paid you $19,500 per year. Assume that you will attend college for four years and prices will stay the same. Calculate the following for your four-year stay at Behrend State College: a) implicit cost, b) explicit cost, c) total cost.
Answers: a) $78,000; b) $152,000; c)$230,000
Problem 1.2.2: Harry and Lloyd are taking a trip to Aspen, Colorado. They will each spend $1,000 on lodging, gasoline, and food. To take the trip, Harry has to call off of his job as a dog groomer. He will miss 30 hours of work in which he was paid $12/hour. Lloyd was recently fired as a limousine driver, so he will not miss work. Calculate the total cost (explicit plus implicit cost) individually for both Harry and for Lloyd.
Answers: Harry = $1,360; Lloyd=$1,000
Problem 1.2.3: You want to go on vacation with your family. By going on vacation, you will have to miss five days of work where you earn $100 per day.What is the opportunity cost of going on vacation? What is the opportunity cost of staying home and working (instead of going on vacation)?
Answers: $500; the enjoyment of vacation
Problem 1.2.4: You are going on vacation and are trying to decide where to fly from. You will be gone a total of 5 days. A roundtrip flight from Erie to your destination would cost $525 while a roundtrip flight from Buffalo to your destination is $425. (Note: Assume flight conditions are the same for both. The time travelled will be the same. You are simply basing your decision on total cost.) The distance between your house and Erie International Airport is 12 miles while the distance between your house and the Buffalo airport is 93 miles. Further, parking at Erie airport is $12.00/day while parking at $9.00/day (in the economy lot.) If the cost per mile travelled in your vehicle is $0.30/mile, calculate the total cost of travelling from each airport.
Answers: Erie=$592.20; Buffalo=$525.80
External Resources
Khan Academy: Scarcity
1.3 How Our Decisions Affect Others
Review Activities
1.3 Vocabulary
Problems
No problems for section 1.3.
External Resources
Khan Academy: Property Rights
Khan Academy: Property Rights and Markets
1.4 Introductory Wrap-up
Review Activities
1.4 Vocabulary
Positive and Normative Economics
Directions: For each of the following, determine whether the statement is positive or normative.
Microeconomics versus Macroeconomics
Directions: For each of the following, determine whether the subject would be studied in microeconomics or macroeconomics.
Problems
No problems for section 1.4.
External Resources
Khan Academy: Economic Models
Khan Academy: Normative and positive economic statements