ECON 201

ECON 201 - Economics 201 8/28 General Notes Go to...

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Economics 201 8/28 General Notes Go to www.people.virginia.edu/~kge8z/guestbook/sign.php to sign into the class Answers to textbook and workbook on reserve in library Register clickers by Thursday Lecture will be about 50 minutes and class will begin at 12:35 Tests will be taken in discussion sections Economics As A Field Of Study Warnings o Do not form opinions based on one person’s experience. o The study of economics is not about learning to be rich. The subject of economics will teach the economic way of thinking. There is a connection between personal freedom and economic wealth. Economists’ favorite conjunction is but. Economics As A Science Economics is a social science (systematic inquiry). Economics is an interplay of facts, theories, stories, and metaphors. Metaphor of the invisible hand—people can act in their narrow self interest, and if by an invisible hand, they can promote the public good. Three points o Economics is a positive science—deals with statements of what is instead of what should be (normative). o Economics involves some abstract reasoning—class cannot be completely facts or theories, a theory will help make sense of the facts. o Economics has begun to influence how other fields look at themselves. Economics As A Toolbox All economies deal with some questions. o What goods must be produced to sustain themselves? o How will these goods be produced? o How will the goods be allocated? The reason for the discipline of economics is the scarcity of resources— economics is the science of choice. 8/30 Economists Guns and butter—represents the surrogate or military goods and food goods Production-Possibilities Table Presents possibilities between the production of goods Lists the amount of each good Production-Possibilities Curve The two goods are plotted against each other, and each point on the curve is an option. When an economy is not at full employment, the point is under the curve (not at full potential).
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When a point is unobtainable, the point is plotted outside the curve. Cost The alternative opportunity forgone by the choice one makes Three Ways To Solve The Three Fundamental Problems Tradition—oldest and often the most prevalent way to solve problems, use procedures that have been in use for several years Central planning (political planning)—people in power determine production and distribution (ex. Norway) Markets (free enterprise/capitalism/price system)—everything has a price for which it can be exchanged in a market, people “vote” for goods with their money and the goods with the most votes are produced more often, goods go to those who want them and have the money to purchase them (US is generally a market system but with some influences from central planning) Preconditions For A Market System Working for wages Markets must exist Private property/property rights Winners and losers, success is rewarded
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ECON 201 - Economics 201 8/28 General Notes Go to...

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