Short Quiz1. Consider this scenario:

A trip on the Greyhound bus from Tucson to Phoenix costs the company $5 per seat in gas

and overhead and Greyhound charges $19 for a one way ticket. If Dr. Mankiw offers $15 right

before the bus leaves Tucson, should Greyhound take his offer if there are 10 open seats?

2. Write down 3 costs and benefits of taking 5 classes in college instead of 4

Greg Mankiw

Go over worksheets

Mankiw Page 6

• Principle 3: Rational People think at the Margin

• How is this a different way of thinking?

• Airplane example?

Sorting Activity• You have 24 hours in a day

• With your partner allocate your resource

• Which of Mankiw’s 10 economic principles does this show?

Paradox of Value• Some items have low prices and high usefulness

(water)

• Others are almost useless, but have high prices (diamonds)

• $1 auction Monday, bring change

Thinking at the Margin Assignment

• Suggest 7 marginal changes the government could make to reduce transactions costs in the circular flow model.

Sleep: 8 hours

Sleep: 6 hours

Sleep: 4 hours

Movie: 2 hours

Video games: 2 hours

Video games: 4 hours

Video games: 6 hours

Cleaning: 1 hour

Hiking: 4 hours

Shopping: 4 hours Shopping: 2 hours

Dancing: 2 hours

Dancing: 4 hours

TV: 1 hour

TV: 2 hours

TV: 4 hours

TV: 6 hours

Bike ride: 2 hours

Bike ride: 1 hour

Nap: 1 hour

Cooking: 1 hour

Cooking: 2 hours

Working: 4 hours

Working: 6 hours

Working: 8 hours

Reading: 1 hour

Reading: 2 hours

Reading: 3 hours

School: 6 hours

Play sports: 2 hours Play sports: 4 hours

Eating: 2 hours

Eating: 3 hours

Driving: 3 hours

Driving: 2 hours

Web surfing: 2 hours

Web surfing: 4 hours

Web surfing: 6 hours

Homework: 1 hour

Homework: 2 hours