econ434notes17a - 1. INTRODUCTION: Classical Economics...

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1. INTRODUCTION: Classical Economics started with approximately Cantillon (1680-1734) and culminated with John Stuart Mill (1806-1873). a. Although Mill was talented in mathematics, he did not apply the modern math then available to economics. It was not until the French Engineers that applied calculus to economics that Neoclassical Economics was born. 2. NEOCLASSICAL ECONOMICS: JULES DUPUIT (1804-1866) -A French Engineer, Influenced by: Cournot -1 st to apply calculus to economics problems -1 st to discuss the concept of MU (Marginal Utility) and relate it to the demand curve. MU of a good Diminishes with an increase in Q -Each increment has a different utility because additional units are Less essential (the least essential need for a commodity determines value). -So, as P decreases, Q increases: a. Economic Model Assumptions: i. 1) Pareto Efficiency efficient zero sum games 1. Anytime you can gain and someone else does not lose, then you have an inefficient point because you could voluntarily trade and increase gains. Ex. The draft is inefficient because you have parties that are willing to exchange voluntarily by one paying the other a higher wage than the army pay in order to take their place. Both would be better
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This note was uploaded on 01/12/2010 for the course ECON 434 taught by Professor Byrns during the Spring '09 term at UNC.

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econ434notes17a - 1. INTRODUCTION: Classical Economics...

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