Lecture 16 - ECONOMICS 100A Professor Dan Acland 10/19/10...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
ECONOMICS 100A Professor Dan Acland 10/19/10 Lecture 16 ASUC Lecture Notes Online is the only authorized note-taking service at UC Berkeley. Do not share, copy, or illegally distribute (electronically or otherwise) these notes. Our student-run program depends on your individual subscription for its continued existence. These notes are copyrighted by the University of California and are for your personal use only. D O N O T C O P Y Sharing or copying these notes is illegal and could end note taking for this course. ICLICKER QUIZ ANNOUNCEMENTS I had a very hard time making questions easier than that for this chapter. There was just very little to ask about the chapter. There is a lot to talk about but very little to ask about. So I apologize for it being a somewhat tougher quiz than usual, and I will do my best to get back to usual questions that are more equal. LECTURE In my opinion, this is the most important lecture of the class. The reason why is because this is about the biggest magic trick in microeconomics. It’s a magic trick that students of economics need to understand. It’s not a good idea when the people who have, arguably, the most influence in public policy decisions in our nation are not in the magic trick; it’s much better if they know what the magic trick is and understand how that could be done. When magicians pull a rabbit out of hat, the crowd is pretty pleased when this happens. And indeed, they think it’s the case that when microeconomists get to this chapter of their presentation of markets, they are self-content about their skills. What you really want to know if you’re a wise consumer of economic theory, you need to know how that rabbit gets into the hat. It didn’t appear magically; we put it in there. There are additional things going on here that they aren’t talking about. This lecture will talk about how you put that lecture into the hat so that you’re a little less thrilled when you see the rabbit coming out of the hat. For some reason that I don’t understand, even though our rigorous methodology makes it able for us to state our assumptions more clearly than any other social scientists in the world, nonetheless, there is a tendency among economists to hide the assumptions. So you have to watch carefully what we do with the rabbit to make it come out of the hat. Slide : Lecture outline: 1. Watch me pull a rabbit out of my hat! (The First Welfare Theorem) a. Market equilibrium is Pareto Efficient. b. Market equilibrium is Hick-Kaldor Efficient. 2. The role of quasi-linear preferences. 3. How did that rabbit get into the hat? (Hint: we put it there.) a. Assumptions we had to make in order to get the magical result. b.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 9

Lecture 16 - ECONOMICS 100A Professor Dan Acland 10/19/10...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online