ECON 511, SUMMER 2016
In the early 1970s, inflation was hitting the U.S.
economy, and one of the results was that beef prices
began to rise to record levels. Some of President
Richard Nixon's advisers urged him to place pric
1. In the movie "The Day of the Jackal" (the 1973 version, not the remake with Bruce Willis), an
assassin who was looking to perform a killing that also would signal his "retirement" as a
contract killer hires someone who lived in Italy to create false id
Alchian & Allen Ch. 2
Why Do People Act as They Do?
1. People act within a means-end framework,
which means they adapt to circumstances
while pursuing their goals.
2. While individuals might have different
preferences, there are similariti
Alchian & Allen Ch. 6
C A P I TA L VA LU E S , F U T U R E Y I E L D S , A N D
Time Value of Money
One of the important factors in economic
analysis is time. In finance, we call it time
value of money, and in economics, we expand
that analysis to
Alchian & Allen Ch. 1
S C A R C I T Y, C O M P E T I T I O N,
& SOCIAL CONTROL
What Do We Mean by Scarcity?
Goods that are scarce are things of which
people want more than what is available.
This contrasts with goods that are free
goods, which are availab
1. The American economist Thorstein Veblen wrote that he believed that over time, economic
problems in the USA would be "solved" by the actions of engineers. In his view, the engineers
would begin to design and build the goods that Americans needed withou
Alchian & Allen Ch. 5
I N F O R M AT I O N C O S T S O F E X C H A N G E
Do Markets Always Work Smoothly?
As A&A point out, there are times when we
dont see prices adjusting quickly to a change
in circumstances. For example, if long lines
are the results
ECON 511, SUMMER 2016
In 1982, theBaltimore Suneditorialized that
Americans do not value education, with the
reason being given that professional athletes,
including those that are not stars, are paid
more than school teache
1. In the late 1970s, there was major controversy over a dam built by the Tennessee Valley
Authority called the Tellico Dam, which is located near the mouth of the Little Tennessee River.
After construction was completed and almost all of the land purchas
Alchian & Allen Ch. 3
What Is Exchange?
People demonstrate that they are willing to
trade with each other even in the absence of
surplus goods. In other words, we do not
trade because we have too much of one set of
goods and not enough of the oth