Opportunity cost in attending early morning class

Opportunity cost is the value of the next-best alternative or the highest-ranked alternative, not all alternatives. In detail, resources are limited so people cannot have goods and services that they want to have. As a result, people should choose something and give up others. From this situation, the second valuable one is called opportunity cost.

           I think my opportunity cost of attending the afternoon class is that I would have less useful time to do any activities during the day because the class would be finished late compared to the morning class. On the other hand, if I choose to attend class in the early morning, I would have more time to utilize because I can have more available time and it allows me to manage my time flexible. However, opportunity cost of the morning class happens also because it would be hard for me to concentrate on the class and do other later activities by giving up some hours of sleeping.

Can we examine 'Safety'?

In my opinion, safety can be measured. In the economic perspective, the safety happens when the marginal cost and marginal benefits of increasing safety are equal. Accordingly, we can even say "it is too safe" to describe the situation where the marginal benefits extremely exceed the marginal coasts. 

Lemons problem

Q. Are lemons problems likely to be more common in some industries and less common in others? Based on your answer to this question, should government regulatory activities designed to reduce the scope of lemons problems take the form of economic regulation or social regulation? Take a stand, and support your reasoning.

The lemons problems are likely to be more common in some industries and less common in others because the lemons problem means the potential for asymmetric information to bring about a general decline in product quality in an industry. For example, lemons problems is most common in the industries of credence goods such as pharmaceuticals, health care, and services. From this point of view, the government regulatory activities are required in order to reduce the lemons problems in that the lemons problems would make negative effects on the quality and price of products. By considering the situation, social regulation might be recommended with the reason that the regulation will decrease adverse spillovers of products. On the other hand, the economic regulation would make the situation worse. It is because the economic regulation would attribute price to be decreased than the profit-maximizing price under the monopoly economic system.

Relationship between Elasticity and Business

The Elasticity is the responsiveness of the quantity demanded of a commodity to changes in its price; defined as the percentage change in quantity demanded divided by the percentage change in price.

The Elasticity concept is very important for running a business because the elasticity concept affects on overall income about providing the service or products in the business. When the price elasticity for a good is inelastic, the company does not need to increase or decrease the amount of its supply for the good because in spite of the situation that there is a change on price of a good, the amount of demand for the good would not be significantly changed. On the other hand, if the price elasticity for the good is elastic, the company would shift the amount of the good supplied; Under the elastic case, the increase of the price means that the benefit for the company goes up. Accordingly, the company would raise the quantity of the supplied good.

Organ Market

IN other countries such as IRAN organs can be bought and sold on the open market. Should the distribution of organs continue to be controlled by the government in the US as it is today.


I think that the US government control over the distribution of organ should be continued in terms of regulation of market price. To be specific, the demand of organ is extremely high while the supply of organ is low. This is because the supply of organ is highly limited and hard to meet the demand of the increasing number of patients who need organ transplantation. Considering the law of supply and demand, such an unavailability of organ for patients may induce very high market price, which most people cannot afford it except high-class people. From this point, when the amount of supply cannot meet the one of demands, the government should impose quantity restrictions on the market. As for the restriction, the government should ban the ownership or trading of goods such as human organ.

The effect of outsourcing on U.S. wages and emplyment

Labor outsourcing by U.S. firms tends to reduce U.S. wages and employment because the increasing number of labors would weaken the competition in the labor market. Whenever foreign firms engage in labor outsourcing in the U.S., however, U.S. wages and employment tend to increase. Thus, these effects of wages and unemployment are ambiguous in the short-term. On the other hand, in the long-term, the effects on wages and unemployment would be much clear compared to the short-term. It is due to the fact that outsourcing amounts to another way for residents of different nations to conduct trade with one another. To be specific, specialization and trade of labor services through outsourcing would bring out overall gains from trade for participating nations

Important equation in economics!

• Marginal prduct = the difference between each product prices
• Total revenue = Total product * product price
• marginal revenue = change in revenue / change in quantity
• Marginal revenue product(MRP) = marginal product (MP) * marginal revenue (MR)

Perfectly competitive industry

Q. why each of the following examples is not a perfectly competitive industry?

Under the perfect competition, the decisions of individual buyers and sellers have no effect on market price. Thus, each perfectly competitive firm in the industry is a price taker which means the firm takes price as a given, something determined outside the individual firm. There are four characteristics of perfect competition;

1. There are large number of buyers and sellers.
2. The product sold by the firms in the industry is homogeneous
3. Both buyers and sellers have access to all relevant information.
4. Any firm can enter or leave the industry without serious impediments.

1. One firm produces a large portion of the industry’s total output, but there are many firms in the industry, and their products are indistinguishable. Firms can easily exit and enter the industry.

The example above cannot be considered as a perfectly competitive industry because in this case mentioned in the question a, one firm has a large portion of the industry’s total output. It means that the firm significantly affects on the price of the industry. However, in a situation of perfect competition, individual buyers and sellers cannot have an effect on price. Accordingly, the example is not in a perfectly competitive industry.

2. There are many buyers and sellers in the industry. Consumers have equal information about the prices of firms’ products, which differ moderately in quality from firm to firm.

One of the characteristics of the perfectly competitive markets is that the product sold by the firms in the industry is homogeneous. However, in the example b, each product manufactured by each firm has a different quality. Therefore, the example cannot be related to the perfectly competitive market.

3. Many taxicabs compete in a city. The city’s government requires all taxicabs to provide identical service. Taxicabs are nearly identical, and all drivers must wear a designated uniform. The government also enforces a blinding limit on the number of taxicab companies that can operate within the city’s boundaries.

In the perfectly competitive industry, any firms can enter or leave the industry without serious impediments. That is, the government does not impose any regulations on the market, or the government should not prevent or interfere its market. However, as it is described in the example c, the taxicabs’ market is controlled by the government. From this point, the example is far from the perfectly competitive industry.