Matthew Larson Professor Fleisher Econ H200 2/25/08 Crude oil prices have fluctuated greatly from 1950 up until 2007. This is due to a string of geopolitical events and natural disasters. Numerous articles and expert opinions have been written on the
Comparative Advantage and Trade What determines which people produce which goods? In this simple "economy" there are two goods, meat and potatoes, and two people who we will call the rancher and the farmer. (I wonder why?) Both people have 8 hours to
Supply and Demand A market is a group of buyers and sellers of a particular good or service. The definition of the good is a matter of judgement: Should different locations entail different goods (and different markets)? What about quality, time, or
Elasticity The price elasticity of demand measures the sensitivity of the quantity demanded to changes in the price. Demand is inelastic if it does not respond much to price changes, and elastic if demand changes a lot when the price changes. Nece
The Effect of Government on Markets 1. Price Ceilings Price controls (like price ceilings and floors) are among the most invasive government interventions on markets, and are usually very inefficient. The American Assoc. of Ice Cream Eaters wants a P
The Efficiency of Markets What is the best quantity to be produced from society's standpoint, in the sense of maximizing the net benefit to society? We need to look at the benefits to consumers and producers. Consumer Surplus Start by looking at eac
Application of Welfare Analysis: The Costs of Taxation A tax causes the after-tax price paid by consumers to go up, and the after-tax price received by sellers to go down. The tax causes consumer surplus and producer surplus to go down. However, the
Costs of Production What decisions lie behind the supply curve, and why is the supply curve upward sloping? Obviously, costs are crucial. We will begin by discussing opportunity cost in more detail, and distinguishing between economic costs and accou
Perfectly Competitive Markets A firm's decision about how much to produce or what price to charge depends on how competitive the market structure is. If the Cincinnati Bengals raise their ticket prices by 5%, there will be a small reduction in the qu
Equilibrium in Perfectly Competitive Markets (Assume for simplicity that all firms have access to the same technology and input markets, so they all have the same cost curves.) Market Supply in the Short Run To derive the market supply curve from the
Monopoly A monopoly is a firm who is the sole seller of its product, and where there are no close substitutes. An unregulated monopoly has market power and can influence prices. Examples: Microsoft and Windows, DeBeers and diamonds, your local natura
Oligopoly Oligopoly is a market structure in which the number of sellers is small. Oligopoly requires strategic thinking, unlike perfect competition, monopoly, and monopolistic competition. Under perfect competition, monopoly, and monopolistic compe
Two Examples of Economic Models
The Circular Flow Diagram: A simple model of who participates on what markets. Examples of Inputs or Factors of Production are labor, land, capital, energy, and materials. The model assumes that firms do not buy goods
Principle #1: People Face Tradeoffs To get something you want, you have to give up something else you want. Scarce resources. Think of allocating your time or money. Societies face a tradeoff between more consumer goods (low taxes) and more public go
Definitions for Chapter 2
Consumptions goods and services- Goods and services that are bought by individuals and used
to provide personal enjoyment and contribute to a person’s quality of life
Capital goods- Goods that are bought by businesses to increase
Definitions for Chapter 1
Scarcity- The condition that arises because wants exceeds the ability of resources to satisfy them
Economics- The social science that studies the choices that we make as we cope with scarcity
and the incentives that influence and
5. Causation and correlation (see p19) - Life expectancy & living environment The fact mentioned in the question tells us that there is a high correlation between life expectancy and living environment. This is true. However, it is not easy to f
The Ohio State University Department of Economics Econ H200 Autumn 2006 Homework #1 Chapter 1, Review Question 3, Problems 5, 7, 8, Chapter 2, Review Question 7, Problem 2 (just 2a, 2b, and 2c). Prof. James Peck
Due Thursday, September 28.
Ohio State University Department of Economics Econ. H200 Fall 2006 Prof. James Peck
Homework #2 Chapter 3, Problems 2 and 7, Chapter 4, Review Question 10, Problems 8, 12, and 13.
Due Tuesday, October 10
Ohio State University Department of Economics Econ. H200 Fall 2006 Homework #3 Prof. James Peck
Homework #3 Chapter 7, Problems 3,4, 5, and 9.
Note: On Problem 9, when you are asked to draw the demand curve, this refers to the quantity of medical p
Ohio State University Department of Economics Econ. H200 Fall 2006 Homework #4 Prof. James Peck
Chapter 8, Problems 10 and 11. Chapter 13, Problems 4, 5, and 10.
Note: On Chapter 13, Problem 10, the variable cost should be $5 Q, not average variabl
Ohio State University Department of Economics Econ. H200 Fall 2006 Problems on Perfect Competition Prof. James Peck
Chapter 14 Questions for Review 5 and 6, Problems 1, 7, 9, and 11. Hint for problem 11: For the original equilibrium with 1000 seller
Ohio State University Department of Economics Econ. H200 Fall 2006 Problems on Elasticity and Government Intervention Prof. James Peck
Chapter 5 Problems 2, 5, and 11.
Chapter 6 Problems 1, 2, 4
Preparation for Midterm: Do not hand in.
The Ohio State University Department of Economics Econ. H200 Autumn 2006 Tuesdays and Thursdays 12:30 - 2:18, Derby Hall 62 Prof. James Peck
Syllabus: Principles of Microeconomics (Honors)
Course Objective: To provide a thorough introduction to econ