ECO 8-22-07 - Econ 2302 8/22/07 1. Maximization a....

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Econ 2302 8/22/07 1. Maximization a. Principles #1- All individuals are motivated by greed, as a whole, we are selfish b. Maximization is not the same as non-satiation i. Non-satiation - more is preferred to less ii. For the sake of simplicity, maximization = non-satiation c. Maximization does not mean: i. People are always correct ii. People are always cold and calculating d. We believe in maximization because it has several implications that are so strongly observed in the world. i. Believe in max. because it works ii. Implication #1: Scarcity 1. Many individuals are pursuing a fixed amount of resources 2. Scarcity implies we are competing for things a. Competition can occur in markets, through violence, sports, war, etc. b. Scarcity not = rarity 3. Definition: something is scarce if, when the good is free, people will demand more than what is available. a. Scarcity means: i. Something that is scarce will have a price >0 ii. Something that is not scarce will have a price =0 1. Note: 0 price does not imply not scarce
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This note was uploaded on 04/07/2008 for the course ECO 2302 taught by Professor Smith during the Spring '08 term at University of Texas at Dallas, Richardson.

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ECO 8-22-07 - Econ 2302 8/22/07 1. Maximization a....

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