Workshop01EconomicThinkingHandout

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School

University of Toronto *

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Course

101

Subject

Economics

Date

Feb 20, 2024

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pdf

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16

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ECO101: Principles of Microeconomics thinking like an economist workshop Robert Gazzale, PhD Department of Economics University of Toronto robert.gazzale@utoronto.ca Gazzale (University of Toronto) workshop: thinking like an economist 1 / 16
Overview welcome! the flipped classroom tutorials and workshops an update on the rules for workshop exercises the True, False, or Uncertain question often uncertain all test marks earned on the explanation Gazzale (University of Toronto) workshop: thinking like an economist 2 / 16
scenario a scenario a: a TFU At the $40 Record Store, the price of every record is $40, including tax. Consider the following scenarios: 1 The only method of payment you have is a $40 store credit that expires tonight. 2 The only method of payment you have is a $40 store credit that expires in one year. 3 The only method of payment you have is $40 in cash. TFU: If it is rational to purchase David Bowie’s The Rise and Fall of Ziggy Stardust and the Spiders From Mars from the $40 Record Store in one of the scenarios, it is rational to purchase it in all scenarios. Gazzale (University of Toronto) workshop: thinking like an economist 3 / 16
scenario a scenario a: a TFU Gazzale (University of Toronto) workshop: thinking like an economist 4 / 16
scenario b scenario b You paid $900 for 100 bobbleheads. You offered them for sale at $10 each, and sold 99 of them. There are two and only two buyers left for the last bobblehead: Sugar and Spice. Sugar offers you $8.50 in cash. In each case, carefully calculate your costs and benefits to determine whether you should sell your last bobblehead to Spice. 1 Spice is willing to pay the list price of $10, in cash. 2 Spice is willing to purchase, in cash, but only if she gets a 20% discount on the $10 price. 3 Spice is willing to pay the list price of $10 with a credit card. The Bank of Boblandia charges a $2 payment processing fee on each credit card transaction. Gazzale (University of Toronto) workshop: thinking like an economist 5 / 16
scenario b scenario b Gazzale (University of Toronto) workshop: thinking like an economist 6 / 16
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