pres 1 spring 2010

pres 1 spring 2010 - Principles of Microeconomics...

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Principles of Microeconomics Introduction
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Ch 1-2: Introduction Objectives: Be able to: Explain what makes something an economic choice; an economic good (or bad) Describe the factors considered if a choice is rational. Describe the roles of economists and their models. Distinguish positive and normative statements in a discussion or reading. Convert normative to positive statements. Evaluate the opportunity cost of a particular economic action/ choice. (explain impact of incentives) Identify and categorizes of resources (factors of production)
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Presentation outline What Economics is about What Economists do The Economic Approach Observation Principles, models Explanation, prediction
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Principles Principle 1: There’s no such thing as a free lunch. (opportunity cost) Principle 2: People are rational. (cost/benefit) Principle 3: Sunk costs are sunk (marginal costs and benefits)
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Scarcity the root issue in Economics. A situation in which wants exceed what can be obtained with existing resources. [ Note: text def: if demand> supply at zero price ] We can’t have everything we want Choices have to be made. What to do or make with what we have…and what to give up
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“No such thing as a free lunch” If we use our resources for one thing (activity, output,. .) We cannot use it for another So, we have to give up something each time we use resources. This is called opportunity cost.
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What Economics Is All About Economics is a social science. Studies how the society organizes iteself to use its resources in living their lives. Systems involved (markets, families, banking) Cause and effect relationships (price and quantity demanded, money supply and inflation) 0
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What is an economy? The systems and decisions involved in th e use of resources .
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Forget money Money is not an essential concern of economics Tool for making exchanges “Money” stands for something else It “represents” income, wealth, profits, revenues Economics is concerned with how choices among real things are made Profits are not per se of value to an economy Profits is an incentive for Businesses to act To an economist, Profits is only good (or bad) if it lead to a desirable or undesirable outcome for the economy
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Core tasks of an Economy: Scarcity requires choices. # primary types of choices These are often called the “core tasks” Allocation Production Distribution
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Allocation Questions: For What do we use our resources. How much of what goods? (guns vs butter
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This note was uploaded on 07/17/2011 for the course ECON 102 taught by Professor Jarv during the Summer '09 term at Rio Hondo College.

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pres 1 spring 2010 - Principles of Microeconomics...

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