January 9-Lecture 2 - January 9, 2008 AGEC 217 Lecture 2...

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January 9, 2008 AGEC 217 Lecture 2 Economic policy input Facts/Perceptions(What we think are facts) Principles(AGEC 217) Values- Goals, desires, what is most important Deciding what to do now and what must wait Economic Goals -Economic Growth—production per person -Economic Freedom—job, production, buy, sell -Price Stability—no inflation -Job Security – no unemployment -Income Equity—fair wage -Consumer Protection -Peace Antagonistic Goals- Emphasizing one goal will result in a loss for another goal When there is a wrong, we naturally pass a law Laws don’t protect from stupidity and caprice Laws sometimes cause stupidity and caprice Systems: Market, command, and tradition What, how and for whom in the US today What: Quality, Variety, Prohibitions January 11, 2008 Lecture 3
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Consumers know best what they need Sometimes what they want is questionable—values will determine Drugs, firecrackers, beer, movies, prostitution, highway drag racing Some limits are pretty repressive Helmets, mufflers, smoking laws How (Producer Freedom, Safety—Worker, Product, Environment) Lowest cost for given quality Limits: Safety, Health, Pollution, EPA, OSHA For Whom (Purchasing Power gets products) Should everyone have the same income? If not, who should get more? Market system: the most productive get the most income Command system: Roosevelt—Income for all Reagan- Access to opportunity, prove your worth Are we doing this right? Baseball players Teachers Clergy Entertainers Scarcity and Choice Most of our resources (land, water, energy) are scarce Scarce resources have a price, the rest are free Why incomes vary: Price of what family has to sell Family Endowments The choices families make -Weeks worked in a year -Level of education -Type of work -Level of commitment to job -Enthusiasm -Ability to save and inheritances -Spouse selection
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Income and wealth vary for anyone throughout life Tall and pretty people, fit people succeed more Purchasing power increased 52% from 94-05 in the 25-34 age group January 14, 2008 Lecture 4 Median household income 2005 All us families $46,300 Men’s earnings $41,400 Women’s earnings $31,900 (77% of men’s) Percent of income taxes paid by those with incomes: Above $46,300 99.1% Below $46,300 0.9% Median household income: %Change 2004-2005 All +1.1% Highest income fifth +5% Lowest income fifth +0.5% Features of an equal income distribution: All citizens of a society benefit equally, including non-performers Little or no incentive to perform better or less than a bad worker Features of a skewed (unequal) distribution:
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This note was uploaded on 04/19/2008 for the course AGEC 217 taught by Professor Deboer during the Spring '08 term at Purdue University-West Lafayette.

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January 9-Lecture 2 - January 9, 2008 AGEC 217 Lecture 2...

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