econ 301 week 1 - Lecture 1. Analyzing Economic Problems...

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Unformatted text preview: Lecture 1. Analyzing Economic Problems Professor Mian Dai Spring, 2011 Econ 301 Microeconomics A road map for todays class What are the key themes of microeconomics? What are the key analytical tools? Constrained Optimization Equilibrium Analysis Comparative Statics What are the differences between Positive and Normative Analysis? Math review: unconstrained optimization Themes of Microeconomics Economics deals with limits (or constrains) Limited budgets Limited time Limited ability to produce How do we make the most of limits? Microeconomics is usually referred to as the science of constrained choice. Microeconomics v.s. Macroeconomics Deals with individual decision maker: worker/household, firm, industry, markets, labor union, trade association etc. How to think like an micro- economist? Constrained Optimization An analytical tool for making the best (optimal) choice, taking into account any possible limitations or restrictions on the choice Equilibrium Analysis Equilibrium is a state or condition that will continue indefinitely as long as factors exogenous to the system remain unchanged Comparative Statics Analysis used to examine how a change in some exogenous variable will affect the level of some endogenous variable in an economic system Think...
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econ 301 week 1 - Lecture 1. Analyzing Economic Problems...

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