3. TAs will now check to make sure everyone has the class lecture schedule pasted or stapled to the inside front cover of the your notebooks.

9. Five Powers of Economic Thinking 1. Resources cost more than you think. Accounting costs--$ cost Opportunity cost--The next highest-valued alternative. 2. All decisions are rational

10. Is this person’s decision rational? http://www.humoroftheday.com/gallery/images/Pierced1.jpg

11. http://www.romandson.com/common/jpg/slap.jpg Is this person being rational?

12. 3. All Decisions are Made at the Margin. http://www.new2usa.com/nova/english/00000226/penny.jpg Margin—the weighing of additional costs and additional benefits of a specific change in the current situation.

13. http://seattlepi.nwsource.com/dayart/20010824/226Ground24Q.jpg

14. Who in here would NOT pick this $100 bill up if you saw it lying on the ground? Why would you pick it up?MB are at least = MC

18. Chicago Blackhawks and Illinois State Lottery-- One adult fan would be randomly chosen at each home game, and if the Blackhawks scored at exactly the 10-minute mark of the second period -- not a second over or under -- then that fan would win $1 million. 5 days after the promotion started 10.00

21. 4. The answer to most questions is found in this simple statement: IT DEPENDS!!

23. It’s going to rain tomorrow. Is that good or bad?

24. I lied to you. It’s going to be sunny tomorrow. Is that good or bad?

25. What are these?

26. What does the future hold in store for you?

27. 5. People are maximizers We all want more than less. We want everything! You have $35,000 in your pocket and you are going to purchase a car. You have narrowed your search to two choices: BMW YUGO

29. Edmund was a wise old man. And he was asthmatic. Thus, he has a tendency to wheeze. He decided he was breathing too much dirty air, and that he should put a new air cleaning system into his house. He talked to doctors, engineers, air system specialists, and sought opinions of anyone with an interest. He learned that the cleaner the air the more expensive the equipment he must install. And he did some heavy thinking about what it would mean to him to wheeze less. He learned the degree of comfort he would experience at different levels of clean air. He decided to place values on different amounts of clean air according to these comfort levels. The cost and benefit data are summarized in the following table:

30. Percentage ofTotal Total Clean AirBenefits MB CostsMC 0% 0 0 10% 5045 20% 13050 30% 20558 40% 26968 50% 31981 60% 35196 70% 371 116 80% 386 150 90% 398 200 100% 406 280 0 0 50 80 75 64 50 32 20 15 12 8 8 5 45 80 50 34 10 13 15 20

31. Percentage ofTotal Total Clean AirBenefits MB CostsMC 0% 0 0 10% 5045 20% 13050 30% 20558 40% 26968 50% 31981 60% 35196 70% 371 116 80% 386 150 90% 398 200 100% 406 280 0 0 50 80 75 64 50 32 20 15 12 8 8 5 45 80 50 34 10 13 15 20

32. Percentage ofTotal Total Clean AirBenefits MB CostsMC 0% 0 0 10% 5045 20% 13050 30% 20558 40% 26968 50% 31981 60% 35196 70% 371 116 80% 386 150 90% 398 200 100% 406 280 0 0 50 80 75 64 50 32 20 15 12 8 8 5 45 80 50 34 10 13 15 20 + 5 + 80 + 147 + 201 + 238 +255 +236 +198 +126

33. Important Terms in Economics

35. Study Group Leaders

36. Post Hoc Fallacy-- You load software onto you computer. The next day you turn on your computer and it doesn’t turn on. Without checking things out, you are sure it was the software that caused the problem. The picture on your old television goes out. You get up and smack the side of the TV. This fixes the TV. You are sure the next time your picture on your TV goes out, you can just smack the side and it will be fixed. A false cause and effect relationship. A occurs before B; therefore, A is the cause of B.

37. Post Hoc Fallacy--A false cause and effect relationship. A occurs before B; therefore, A is the cause of B. Superstitions are post hoc fallacies.

38. Fallacy of Composition--What is true of a part is true of the whole. "A car makes less pollution than a bus. Therefore, cars are less of a pollution problem than buses." "Atoms are colorless. Cats are made of atoms, so cats are colorless." “All businessmen are crooks.”