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1-25 - mutual benefits transactions making someone better...

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LE 240 Hutchens office hours: Wednesday: 2-3 or by Appt (Ives 342) RMH2 I. Moods of Inquiry II. Mutual Benefit and Value Judgments III. Predictive Statements in Economics A. Theory B. Testing Hypothesis – graphs/regressions IV. An example V. Chapter 2? 3 types of statements: 1. Descriptive: The unemployment rate is 4.5% 2. Prescriptive: An increase in minimum wage will increase the unemployment rate 3. Normative: We should not increase minimum wage The first two is empirically verifiable. The third is not. Economics works best with the first two questions. The basic idea of normative economics is that society should promote
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Unformatted text preview: mutual benefits transactions: making someone better off without making someone else worse off Examples of policies that lead to mutually beneficial transactions: Imperfect information (Ignorance) Capital constraints Pareto Improving Transaction (e.g. government provides loan guarantees to banks that lend to students for education loans) Value judgments: 1. Society should always encourage mutually beneficial transactions 2. All market transactions are mutually beneficial 3. Therefore, society should always encourage markets-ignoring third parties-potential for exploitation...
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