Summary
Microeconomics and Behaviour (UEC10406) samenvatting
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Summary of chapter 1 to 14 of the book Microeconomics and Behaviour by Frank, R. H., & Cartwright, E. J. (2020) and notes of lectures.
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Introduction to Advance Microeconomics
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Microeconomics samenvatting
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IBEB Microeconomics Summary (English). Grade: 9.9
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Chapter 1 – Thinking like an EconomistMicroeconomics is the study of individual choices and the study of group behaviour in individual
markets. Macroeconomics, by contrast, is the study of broader aggregations of markets. For
example, it tries to explain the national unemployment rate, the overall price level, and the total
value of national output.
Should I do activity x? If C(x) denotes the costs of doing x and B(x) denotes the benefit, it is:
If B(x) > C(x), do x; otherwise don’t
B(x) = the maximum monetary amount you would be willing to pay to do x
C(x) = the value of all the resources you must give up in order to do x
Reservation price of activity x is the price at which a person would be indifferent between doing x
and not doing x
Opportunity cost is the value of all that must be sacrificed in order to do the activity
Voorbeeld: je wilt een dagje gaan skiën, deze dag is je €60 waard. Het kost vandaag €40 om te gaan
skiën, inclusief de busrit, lift ticket etc. Dit is echter niet het enige wat je geld kost. Je zou namelijk
ook in plaats van te gaan skiën een dagje kunnen werken wat je €45 euro oplevert. De totale kosten
om een dagje te gaan skiën bedragen hierdoor €85. C(x) > B(x), dus je kiest ervoor om een dagje te
gaan werken.
Sunk cost is a cost that is beyond recovery at the time a decision is made and so should be ignored
Marginal cost is the increase in total cost that results from carrying out one additional unit of an
activity
Marginal benefit is the increase in total benefit that results from carrying out one additional unit of
an activity
The cost-benefit rule tells us to keep increasing the level of an activity as long as its marginal benefit
exceeds its marginal cost
The average cost of undertaking n units of an activity is the total cost of the activity divided by n
The average benefit of undertaking n units of an activity is the total benefit of an activity divided by n
In dit voorbeeld zal de eigenaar kiezen voor het hebben van 3 boten. Dit omdat de marginale kosten
€100 bedragen. Deze kosten van €100 is tot en met bootje 3 minder dan wat het oplevert. Dit is
echter niet meer het geval bij de laatste boot. 640-600 = €40, dit is €60 minder dan de marginale
kosten van €100, de eigenaar zal hier dus niet voor kiezen. Stel dat je marginale kosten €150
bedragen zal de eigenaar enkel voor 2 boten kiezen.
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, Bovenstaande figuur laat zien wat de ‘’willingness to pay’’ is van Suzan als het gaat om de
telefoonkosten van het bellen met haar vriendje. Als Suzan haar vriendje minder dan 400 minuten
per maand spreekt, dan overtreft de benefit over de marginale kosten. Als ze meer dan 400 minuten
per maand bellen, wordt de hoeveelheid die minder wordt gesproken als een voordeel gezien,
waardoor ze minder zal gaan bellen.
MC(x) = marginal cost
MB(x) = marginal benefit
If MC(x) > MB(x) then it pays to reduce the amount of activity. If MC(x) < MB(x) then it pays to
increase the amount of activity
Homo economicus is a person who only cares about personal material costs and benefits. He does
not contribute voluntarily to private charities, keeps promises only when it pays to do so, and if the
pollution laws are not carefully enforced, disconnects the catalytic converter on his car to save on
fuel. And so on.
A positive question has a definitive right or wrong answer. Economic analysis is primarily about
answering such questions
A normative question is a question that elicits value judgements on what ought or should be.
Economic analysis cannot answer such questions
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