Econ semester notes

Econ semester notes - Econlecture1 16:57 Math:...

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Econ lecture 1 16:57 Math: Draw and interpret lines on a graph Calculate areas of triangles Solve a system of two equations with two unknowns I can go to any discussion time that fits in my schedule with my TA. If I want to switch my  discussion (different TAs) I need to get permission from both TAs. Economics and a Social Science Economics studies the production and allocation of goods and services in a world where  resources are scarce Microeconomics: focus is on production and consumption decisions of individuals and  firms Macroeconomics: focus is on economy-wide fluctuations Economics is defined by its core concepts than by the topic it addresses. Core Concepts Scarcity  Resources are scarce For individuals: how to use available time, energy, money? For Societies: how to utilize and allocate productive resources?
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Natural resources: lumber oil, natural gas, clean water,… Human resources: skill, intelligence, labor,… Core Concept: Opportunity Cost Opportunity cost= cost of foregoing the next best option. What are you giving up: that is the opportunity cost. Mick Jagger concept, example Monte Ball: he gave up going to the NFL draft to stay one more year at UW. He chose to  forgo an annual income of about a million dollars per year. Core Concept: Marginal Decisions Economics applies marginal analysis to questions about how much to do of something Examples How many stores locations to open Starbucks: Decision made at the margin What’s the most profitable location What’s the second most profitable location… Stop at the margin, increase and increase until the margin is not worth doing.  How many workers to employ How many hours to work How many dollars to invest in a retirement plan Idea: What are the benefits and costs of doing a little bit more? Core Concept: Incentives Underlying almost all economic models is the idea that people will take advantage of  opportunities to make themselves better off.
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Buy from the seller who offers the lowest price Choose the job that offers the best salary and benefits Etc. Analogously: people are unlikely to change their behavior unless there are changes in  their incentives (or information) If you want to get people to do something different, you need to change their incentive. Cigarette example
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This note was uploaded on 04/09/2012 for the course ECON 101 taught by Professor Hansen during the Spring '07 term at Wisconsin.

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Econ semester notes - Econlecture1 16:57 Math:...

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