Test 1 Notes - Econ 202 Notes Test 1 The law of Tanstaafl o...

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Test 1 The law of Tanstaafl o Story about the economics who were sentenced to death because they couldn’t come up with a definition of economics in one sentence but did before they died. “There is no such thing as a free lunch.” There is a cost for everything. Definition of Economy: o The institutional structure (mental, physical) through which people coordinate their needs. Family is the most important institute in an economy. In agricultural economies the families are larger which include extended families, everybody lives in a close proximity. Families are so large in agricultural economies because man power is what is needed. In industrial economies the families are smaller (nuclear families) which usually consist of the parents and 1-2 children. Institutional structures are based on what works for the people in the culture. Physical: places where the people make their transactions. Mental: culture of the economy. Norms Values and beliefs are based on the beliefs of the economy. o An example would be how back in the day it was forbidden to eat meat on Friday so one would not serve meat on Friday instead he/she would serve fish or a vegetarian dish instead of forcing meat on the customers. Definition of Economics: o The Social Science concerned with the efficient use of limited resources to achieve maximum satisfaction of unlimited material wants. o People engage in rational behaviors (elements of Scientific Methods, formula of a theory) Observation of real world behavior Formulating hypothesis Testing of hypothesis Accepting or rejecting the hypothesis. If accepted it turn into a theory.
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Test 1 Notes - Econ 202 Notes Test 1 The law of Tanstaafl o...

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