Lec1 - Unskilled EC 1 Skilled M&P G Semi-Skilled UCLA Dr....

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G Skilled Semi-Skilled Unskilled EC 1 UCLA Dr. Bresnock Lecture 1 What is Economics ? Here are several definitions. It is a social science concerned with the efficient use of limited, or scarce, resources to achieve maximum satisfaction of human material wants. (typical texts) Other social sciences: political science, psychology, etc They all study human behavior in disciplinary ways. Constrained optimizations – It is the study of how people and society end up choosing, with or without the use of money, to employ scarce productive resources that could have alternative uses, to produce various commodities and distribute them for consumption, now or in the future among various persons and groups in society. (Samuelson) An analysis of choice making. (Bresnock) Scarcity leads to making choices that leads to analysis of weighing out costs “Benefits vs. cost” - What gives you the most positives than negatives “How much” decision based on limit of budget Fundamental Economic Problem Unlimited Wants vs Limited Resources Demands > Supplies Scarcities Ch 10 + 11 Consumer Decision – maximizing satisfaction given their limited income, or budget. Constraint is limited income Our constrained optimization: Consumer’s objective = maximizing satisfaction or utility Producer Decision – maximizing profit given their limited resources. Constraint is limited resources Producer’s objective is maximizing profit (for this class) Government Decision – maximizing net benefits to society given limited budgets. Constraint is limited budgets Government’s objective is maximizing net benefits Example: in funding a research for vaccine for a certain disease, government would look at how many generations this would affect, how it affects society, etc Private Sector = Consumers + Producers + Public Sector = All Levels of Government Mixed Market Economy , i.e. U.S.
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EC 1 Lecture 1 Dr. Bresnock Roughly 70/30 (private/public) Types of Economies Transitional Economies – Eastern Europe Pure Market Pure Command (Capitalism) (Communism) U.S., Canada, Japan, EU China Cuba, N. Korea Pure Market – private property rights and decentralized decision making coordinated through markets. Pure Command – state ownership and control of economic resources and central planning. Soviet Union, a good example of pure command, made a central planning of four to five year’s planning… Resources – also known as inputs . An input is also referred to as a “factor of production ” if it earns income over and over again, i.e. labor and capital equipment are used repeatedly in production whereas other inputs, i.e. electricity, cloth, are used only
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This note was uploaded on 07/05/2011 for the course ECON 1 taught by Professor Nagata during the Spring '08 term at UCLA.

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Lec1 - Unskilled EC 1 Skilled M&P G Semi-Skilled UCLA Dr....

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