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EFN 422 - Lecture 1(1)

EFN 422 - Lecture 1(1) - EFN 422 Economics and Data...

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EFN 422 Economics and Data Analysis
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W hat is econom ics about?
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W hat is econom ics about? Οἰκονόμος Oikonomos House rule Manager/housekeeper
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W hat is econom ics about? Lionel Robbins (1932) "The economist studies the disposal of scarce means. He is interested in the way different degrees of scarcity of different goods give rise to different ratios of valuation between them, and he is interested in the way in which changes in ends or changes in means—from the demand side or the supply side—affect these ratios. Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses ."
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W hat is econom ics about? Andrew Schotter Microeconomics a modern approach One major purpose of microeconomics is to help us explain the institutional structures in an economy . The question that microeconomics asks is, how do individuals, in an attempt to maximize their own self- interest, create a set of economic institutions that structure their daily lives?
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W hat is econom ics about? Imagine that you are an executive with a large firm . You wake up one morning and, stumbling out of bed, realize that the day is going to be an unpleasant one. You rush to get a head start on the commuter traffic, but by 7 A.M. you are caught in a massive traffic jam on the expressway. As your car sits idling on the right side of the road, you watch the barely moving vehicles ahead of you and contemplate the rest of your day. At 9 A.M. you have an appointment with a representative of your firm’s insurance company to find out whether that company will renew your firm’s product liability insurance with the same deductible as before. At 10 A.M. you are scheduled to meet with a representative of the local utility company to discuss some proposals for cutting energy usage that might decrease your firm’s high utility costs. Because the utility company is a publicly sanctioned monopoly , your firm cannot simply purchase its electricity from another company with lower rates. At 2 P.M. a committee that you head will be meeting to vote on some difficult issues. The committee members are deeply divided, and you hope that a majority will emerge on each issue. At 4 P.M. your firm will inform its executives about their yearly bonuses . This event always creates tension because the bonuses are based on top management’s assessment of the performance of each executive during the past year. After work, you will go to your health club . You need the exercise, but the main reason for your visit is that you paid a large annual membership fee and feel guilty about not using the club enough.
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