ECON 1110 Unit 1 Lecture Notes

ECON 1110 Unit 1 Lecture Notes - I ntro to Micro Lecture...

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Intro to Micro Lecture Notes Chapter 20 - 1776: Adam Smith writes the Wealth of Nations o Talked about idea that wealth and power can be obtained by individuals o Did not need to be given by God or kings - Real income distribution in US: 50% below 50k, 30% under 100k - Kernel Density Indicator: proportions income levels in extremely small increments - Lorenz Curve and Gini Coefficient: shows distribution of money through population o If it were perfectly equal it would be a diagonal line o Gini= A / (A+B) - In 1993 census bureau changed methodology of collecting data, makes it not possible to compare posts 1993 data and pre 1992 data o As a result if comparing 1995 and 1985 you can see a huge increase in equality, but when comparing 1995 and 1993 in reality there is little change - From 1979 to 1989: inequality decreased, but larger portion of middle class went from middle to upper class (few went to the poor) - From 1989 to 2000: entire distribution moved to the right - From 1979 to 1989: distribution of BLACKS also went from middle to upper class - From 1989 to 2000: entire black distribution got significantly richer - Single mothers did not do well during 79 to 89, but did phenomenal in 90’s thanks to welfare reform - From 1980 to 2000: students with only high school education did not change much - However from 80 to 00 distribution shifted strongly to the right for college grads - What happened to America in the 80’s happened to Japan and German in the 90’s - 2000-07: entire distribution of wealth moved to the left - Question: did income equality increase substantially Chapter 2 - Positive statements: facts (no values involved) - Normative statements: opinionated - Circular flow diagram: o Households and firms o Markets for factors of production and goods and services o Households give to firms through market of FoP, firms give to households through Market for GaS - With production possibilities: OC increases as you increase production of one good o Points inside the curve = inefficient (doesn’t use all of land, labor, capital) o Frontier is concave: OC in lost wheat production increases as society produces mo cars To produce first car: least productive workers in wheat farming relative to car production are switched

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The further we increase car production, the more productive farmers we have t
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This note was uploaded on 12/13/2010 for the course ECON 1110 at Cornell University (Engineering School).

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ECON 1110 Unit 1 Lecture Notes - I ntro to Micro Lecture...

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