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Unformatted text preview: Principles of Economics I
Economics 101 Section 400 Class 1 Who is this idiot, and what's he doing here? Chad Hogan Capricorn Enjoys quiet walks on the beach Likes to sip wine with that special someone by an open fire Friends say I'm a hopeless romantic who really knows how to party 1/7/2008 Class 1 2 Who is this idiot, and what's he doing here? Chad Hogan firstname.lastname@example.org Lorch M109 936 2745 Friends say I'm a hopeless romantic who really knows how to party 1/7/2008 Class 1 3 Lectures: Monday and Wednesday 2:30 pm 4:00 pm Lorch 140 Office Hours: Tuesday & Thursdays 3:00 pm 4:30 pm Or by appointment Lorch M109
Class 1 1/7/2008 4 Graduate Student Instructors Dimitriy Masterov email@example.com Section 401, Friday 10:0011:30 Dennison 315 Section 402, Friday 11:301:00 Dennison 351
5 1/7/2008 Class 1 Graduate Student Instructors Owen Kearney firstname.lastname@example.org Section 403, Friday 1:002:30 Dennison 330 1/7/2008 Class 1 6 Graduate Student Instructors Dan Leeds email@example.com Section 404, Friday 11:301:00 Dennison 337 Section 410, Thursday 4:005:30 Lorch 142
1/7/2008 Class 1 7 Graduate Student Instructors Andy McCallum firstname.lastname@example.org Section 405, Friday 1:002:30 Section 411, Friday 2:304:00 Dennison 316 Lorch 142
Class 1 8 1/7/2008 Graduate Student Instructors Annika Mueller email@example.com Section 405, Thursday 2:304:00 East Hall B247 Section 407, Thursday 11:301:00 Dennison 316 1/7/2008 Class 1 9 Course Materials Text: Hubbard & O'Brien, Study Guide Microeconomics, 2nd Ed., Prentice Hall, 2006 Optional CTools 1/7/2008 Lecture slides Assignments Announcements Grades Etc.
Class 1 10 Assessment Option 1
Exam 1 Exam 2 Final Quizzes 20% 20% 40% 20% 1/7/2008 Class 1 11 Assessment Option 2
Exam 1 Exam 2 Final 25% 25% 50% 1/7/2008 Class 1 12 Exams Final Exam: April 21, 1:30 pm 3:30 pm Tentative times for other exams: Exam I: Feb. 11, 8:00 pm 10:00 pm Exam II: March 24, 8:00 pm 10:00 pm 1/7/2008 Class 1 13 Assignments and Quizzes Weekly problem sets will be assigned Not assessed directly Quizzes will be administered in discussion section on the following dates: January 17 and 18 (week 3) January 31 and February 1 (week 5) March 6 and 7 (week 9) March 13 and 14 (week 10) April 3 and 4 (week 13) 1/7/2008 Class 1 14 Other 101 sections Please, do NOT attend other 101 lectures
Not perfectly substitutable Not identical material Reflect outlooks and priorities of different faculty members Not the same exams Please do NOT attend discussion sections other than that for which you are registered
Class 1 15 1/7/2008 Attendance Attendance at lecture or discussion section is not compulsory Attendance at lecture and discussion section is strongly recommended No sympathy for absentees Quizzes provide rewards for discussion section attendance Please: take responsibility for your own education, and make the effort to get everything you can out of the resources provided for you
Class 1 16 1/7/2008 Syllabus A copy of the syllabus can be found, perused and downloaded from CTools Will be online tomorrow morning Includes all the administrative information I've provided today Includes an outline of topics covered through the term Includes a reading guide 1/7/2008 Class 1 17 And now... ...for a hint of things to come... 1/7/2008 Class 1 18 SCARCITY The inability to satisfy desires with available resources. Scarcity abounds! 1/7/2008 Class 1 19 The Economic Problem
How do we allocate scarce resources to satisfy limitless wants?
What to produce? How to produce it? For whom to produce? Important implication: "there's no such thing as a free lunch"
Class 1 20 1/7/2008 Economic Systems An economic system is a collection of institutions that determines how resources are allocated Often think of three canonical economic systems:
Traditional Command Market i.e. Determines how the three questions will be answered 1/7/2008 Class 1 21 Positive Economics We can ask the simple questions:
What do we produce? How do we produce it? For whom are these goods produced? The answers to such questions are (at least notionally) capable of verification We call such statements "positive" 1/7/2008 Class 1 22 Normative Economics We can ask more complex questions
What should be produced? How should we produce? For whom should we produce? Answers to such questions can never be verified as correct
Always involve value judgments Value judgments will never be universally compelling We call such statements "normative"
Class 1 23 1/7/2008 Positive v Normative Economics Generally commitment to the idea of economics as a positive discipline No discipline is logically adequate to defend normative statements Most economists think this makes them seem much more like scientists Despite this, most economists embrace at least one normative idea (whether implicitly or explicitly) as selfevident Class 1 24 1/7/2008 Efficiency Consider how resources are currently allocated Imagine reallocating resources in such a way that: Do you think that such a reallocation should take place? Class 1 25 Nobody is made worse off At least one person is made better off 1/7/2008 Example Amy, Bill and Chris all buy iPods Amy would be happier if she had a white one Bill would be happier if he had a black one Do you think that the allocation of iPods should change? Class 1 26 Amy's is black Bill's is white Chris's is silver 1/7/2008 Efficiency Normative statement: Any reallocation of resources that makes at least one person better off, and makes no person worse off, should be pursued. 1/7/2008 Class 1 27 Efficiency Implication: We should only be satisfied with an allocation when it is impossible to make a person better off without making another worse off. 1/7/2008 Class 1 28 Efficiency Pareto Efficiency: An allocation of resources is efficient if reallocating resources to make one person better off will necessarily make another person worse off. 1/7/2008 Class 1 29 Course Goals To analyze the way in which markets direct resources To determine how efficiently markets allocate resources To contemplate remedies when markets fail to allocate resources efficiently i.e. can we improve upon the market outcome to make some people better off without making anybody worse off?
Class 1 30 1/7/2008 For next class Read chapters 1 & 2 of the text Syllabus will be posted tomorrow Assignment for this week's discussion sections will be posted tomorrow as well 1/7/2008 Class 1 31 ...
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This note was uploaded on 04/01/2008 for the course ECON 101 taught by Professor Gerson during the Winter '08 term at University of Michigan.
- Winter '08