Essay About Economic Example And Opportunity Cost

Econ Fall Exame 2016
EXAMINATION #1 — ECO 6321CHOOSE 10 OUT OF THE FOLLOWING 14 TERMS TO DEFINE AND PROVIDE AN ECONOMIC EXAMPLE ILLUSTRATING THE TERM (1 point each) [total 10% out of 100%]Opportunity cost: A benefit, profit, or value of product or service that must be given up to acquire or achieve something else. Since every resource (land, money, time, etc.) can be put to alternative uses, every action, choice, or decision has an associated opportunity cost. Example: I would have gone to the Hawaii vacation since it cost less and the tickets were not refundable but I have to go to Venice vacation instead if the opportunity cost doesnt make sense to most people.Marginal Revenue: Increase in the gross revenue of a firm produced by selling one additional unite of output. Example: Selling one more Pizza or one less is really made no difference in the bottom line and amounted to nothing more than marginal revenue for the troubled tech company.Hidden-cost fallacy: It is an expense not normally included in the purchase price of a product or service. occurs when you ignore relevant costs. A common hidden-cost fallacy is to ignore the opportunity cost of capital when making investment or shutdown decisions. Example: When making the commitment to buy a home. There are hidden costs during the purchasing like application fees, inspection fees, closing costs. these costs can drive the final price up by thousands of dollars. Learning Curves: It is an important modern concept according to which cumulative experience in the production of a product over time increases efficiency in the use of inputs such as labor and raw materials and thereby lowers cost per unit of output. ”Look ahead and reason back”.