ECON lecture 6 - Economics 101 Introduction to...

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Unformatted text preview: Economics 101 Introduction to Microeconomics Lecture # 6 Feb. 6, 2008 1. Markets: The End of the Story, First 3. Lessons from Final Steak Mkt. Exercise b. Supply & Demand: Mirror Images b. Market = Economy-wide Inferences 2. Digging Under Market D&S a. Limitations of Two-Dimensions b. Many Effects on D&S + PRICE (shifts vs. movements along curve) c. Social Inferences 3. Demand & Supply (Determined through Markets) a. Dynamics & Equilibrium b. Social Implications of Market Solution (Maximizing Benefit — Cost) c. Controlling Prices 4. “ Elasticity” = % Change in Quantity % Change in “Driver” The Economics Tutoring Center has started offering hours again for Spring 2008. Just want you to know so you can let your TAS and students know it is an option. Please see (or direct your students to) the following Web site: http://instructl.cit.cornell.edu/Courses/econetc/ for lots of information. Here are the basics: 1. It's free 2. It's a drop-in based clinic 3. It's staffed by undergraduate econ students 4. It's housed on the 4th floor of Uris Hall - office #477 . I supervise the operation It's primary focus is to help in intro micro and macro _O\U’I dmxmzofimav mccEmSmEE rmoES 203m. m 32.00 3 003m: 938 8mm. 5 ><>=..>_w_.m m0.» ._._.=m OOCWmE mccmozcm dong m: .26 0025: 903 A033: OmwQ :5 © :5 mi :02, www.mnmqm 00:839.; <38 :8 02%: m3 E m9. 308 3323333. am: 3‘53» 9. 03m: Smo©~=o$boa 35203? .25 act—96333. rang—:6 zonmm 92.58 m: 00:5: Gigi? Question of the Week #2 HAND IN FOR EXTRA CREDIT NEXT MONDAY, FEB. 11, 2008 A major problem in organizing a complex, modern economy is determining what the true preferences are of its citizens. What do they need, and what makes them happy? Explain briefly how the saying: “Put your money where your mouth is!” provides insights on the value of markets in solving this problem. EM” /¢5 You start with & 6 oz. steaks. This is your total quantity of food for 4 days. STEAK PRODUCERS (1) (2) (3) CHECK ; Exchange Ratio How many pizzas This leaves you with Initial Wealth Pizzas/Steaks will you buy? how many steaks [2 + 1 ] + 3 = in Steaks 1. 2 0 $40 =2 E z: [ L1H Z 0%. 4’ / 2115+! = Z M a £5” awf=z PIZZA MAKERS You start with g 6 12” Pizzas. This is your total quantity of food for 4 days. . (1) . (2) (3) CHECK : Exchange Ratio How many steaks This leaves you with Initial Wealth Pizzas/Steaks will you buy? how many pizzas [1 x 2 ] + 3 = in 1' Z /4’ Zf/fi‘ -= ‘22 Individual’s Wealth (N0. of 12”Pizzas) 4 16 32 Total Steaks Demanded Individual’s Wealth (N o. of 602. steaks) 2 6 12 20 Total Steaks Supplied Market for Steaks (Food for 4 days! Demand for Steaks [by Pizza Owners! Price Pizzas/ Steak 1 2 4 8 ; / Z / / ,03 5 2.75 .74 .23 Su 1 of 602. Steaks b SteakOwners Price Pizzas/ Steak W Exchange Ratio (Pizzas/ Steak) - No. of 2 4 6 8 10 12 14 16 18 20 22 24 26 28 3032 Steaks Umamsu .. T is .mfiksazkht iii 31 U<Um Dmamjg mmjwiufl _:.qm_fim:nm 10359 031.3%. PzfiofL 22m” mm u 38“. Eamzmzmmm 5 GE ma no no u 38.“. E===mmmm S nmio.‘ mg we. to m Emfifia {mffl Emwxfl *9, U<Um _ Ea Emma 1.. its? 0.3.383.“ $2.1: in; 35mm 9 mcwEfi Enhanzihmé quxfl *2 U<Um mcnufn nnmfl _:_qm_1m:nm T U339 091.3% ”2.123....“ 22m” Q. n Ema. E==3mzmmm .5 mm: m: P J u 38“. new” 2 Engine P ma. 1 w Zmfiig new: in; 28$ 9 9.3.6:: E1hnaFEHm5 p quxmfi *2 9.29...
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