1-Introduction

1-Introduction - 1 Agenda Introduction to Markets Course...

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Unformatted text preview: 1 Agenda Introduction to Markets Course Overview The Basics of Supply and Demand What To Take Away Microeconomics The Structure of the Course Consumers and Producers Market Interaction Uncertainty Perfect competition Monopoly and Pricing strategies Competitive Strategy Auctions Information in Markets and Agency Game Theory Introduction to Markets Consumer Theory and Demand Technology and Production 2 Microeconomics The Structure of the Course Consumers and Producers Market Interaction Uncertainty Perfect competition Monopoly and Pricing strategies Competitive Strategy Auctions Information in Markets and Agency Game Theory Introduction to Markets Consumer Theory and Demand Technology and Production Are turnstiles worth their cost? The L.A. County transit agency has used a gate-free honor system for decades. Cheaters cost the system at least $5 million a year in lost revenue. MTA has installed eight turnstiles on a trial basis (at Union Station, and five are operating at the Wilshire-Normandie station). The plan is to install 387 turnstiles in the subway system by early 2010. 3 Active vs. Passive Monitoring at MTA Currently, the Los Angeles MTA System has the following system of fares and fines: One way ticket on one line: $1.25 If caught traveling without a valid ticket, you face a fine of $250 and 48 hours of public service. The agency estimates it loses about $5 million annually to fare evasion, and its fare evasion rate on rail lines stands at 6 percent. The plan to install 387 turnstiles will cost $46 million (not counting operation and maintenance and the opportunity cost of the travelers' time if overall commute time goes up). Are turnstiles worth their costs? Why not raise the fine if caught without a ticket? Why not increase the frequency of random checks on passengers? We will develop the tools to give clear, quantitative answers to these questions when we study behavior under uncertainty. Microeconomics The Structure of the Course Consumers and Producers Market Interaction Uncertainty Perfect competition Monopoly and Pricing strategies Competitive Strategy Auctions Information in Markets and Agency Game Theory Introduction to Markets Consumer Theory and Demand Technology and Production 4 Innovation and Technological Change Innovation is a powerful driver of increasing productivity in firms. Innovations change the production function of firms in such a way that more can be generated with the same number of workers and capital investment. As a result, if wages and interest rates stay constant firms total costs decrease with innovations. During the industrial revolution, newly invented machines substituted for craftsmanship and as a result, the demand for skill labor decreased. As a result the earnings gap between skilled and unskilled labor reduced during the industrial revolution....
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This note was uploaded on 11/30/2010 for the course ECON 251 taught by Professor Tontz during the Fall '10 term at USC.

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1-Introduction - 1 Agenda Introduction to Markets Course...

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