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ECON 110: Week 1 and Week 2

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by: Connor Workman

ECON 110: Week 1 and Week 2 ECON 110

Marketplace > Brigham Young University > Economcs > ECON 110 > ECON 110 Week 1 and Week 2
Connor Workman
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Principles of Economics
Professor Arden Pope

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About this Document

These notes cover in-class lectures one through six, given Monday, Wednesday, and Friday of the first two weeks of class.
Principles of Economics
Professor Arden Pope
Class Notes
Economics, econ 110, Pope




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This 0 page Class Notes was uploaded by Connor Workman on Friday January 15, 2016. The Class Notes belongs to ECON 110 at Brigham Young University taught by Professor Arden Pope in Winter 2016. Since its upload, it has received 111 views. For similar materials see Principles of Economics in Economcs at Brigham Young University.


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I'm pretty sure these materials are like the Rosetta Stone of note taking. Thanks Connor!!!

-Lori Moore IV


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Date Created: 01/15/16
ECON 110 0 KEY o ltL1gt Lecture 1 ltL1gt End of Lecture 1 o ltL2gt Lecture 2 ltL2gt End of Lecture 2 o Important for examsquizzes o ltL1gtlntroduction o Organized with resources to help students succeed Wellorganized course syllabus Lectures High quality experienced professor Online homework Aplia Excellent text book Aplia Mankiw Online grades consistently updated Alternative style book for book report Wheelan Naked Economics Regular review sessions by TA s to be announced Walkin Lab 8090 JFSB Schedule to be announced 0 Tests Multiple choice 35 3550 questions 0 Homework 1100 PM on Friday all assignments are due The Aplia homework s are not designed to prepare you for the exam Only the lectures and the textbooks o Quizzes At Random at the beginning of class 0 What is your name 0 Remember last time we talked about 39Blank What are the 39Blank Easy questions that will demonstrate if you were awake or not during the previous lectures 0 Grading Generally there is a curve Weighted so ten percent get A s and ten percent get A s ltL1gt o ltL2gt Introduction to Economics which is very different than the rst three chapters in the book 0 De ne economics The study of or the science that or the academic discipline that deals with the allocation of scarce resources to meet human needs and objectives Allocation involves multiple dimensions of time space people material ect Economics only deals with scarce resources Scarce There are tradeoffs there is a cost to using it Not everyone can use all they want of it with no costtradeoff A limited resource becomes scarce based on supply and demand 0 Consider the parable of not enough air We need to do a constrained allocation problem We consider rst that everyone is equal in value Then we eliminate those that are the least ef cient in processing air big men hyperventilators Allocation is a life or death situation Chinese air pollution Economics is not a natural or physical science It is a social science The focus is on human needs and objectives Economists are not good earth rst environmentalists but are human rst environmentalists Anthropocentric or humancentered science ltL2gt o ltL3gt Modeling 0 In order to make sense of data a model must be created that will allow some kind of inference or prediction Mathematical equations have to be used in order to interpret the data Model of consumer behavior 21 Models of producer behavior 13 amp 14 Supply and demand model consumer produces demand curves producer produces supply curves Perfect competition model Models of Monopoly Macroeconomic models Econometricstatistical models Linear programming models Optimal control models ltL3gt o ltL4gt Utility is de ned as levels of satisfactionwellbeing that you receive from consuming goods 017 CD 3 Marginal Utility is the change of utility with respect to the amount of goods consumed If the max amount of pizzas you can eat is six and you re given the option between seven and zero pieces you ll choose seven If you are given the choice between six and seven you ll choose six The Law of Diminishing Returns is when the pizza doesn t really give you as much utility as the rst few slices did Static vs dynamic models Only a snapshot in time vs bringing in other factors type of pizza time of day cost of the pizza ect Constraint A variable added that restricts the possible intake of goods like income money available to spend Constrained optimization is trying to get the most out of a good when your intake is restricted by something like a price Demand Curves are when we take the quantity of demand on the x axis and the price on the y axis Only two variables can be used in this twodimensional curve When a demand curve slopes downward the Law of Demand is shown which is that when prices go up demand goes down Now we add a second good to the operation like hamburgers We would use a contour style map to display the three axis of information on a 2D scale 0 ltL4gt o ltL5gt Lets go back into maximizing the utility of pizza There s a max point Imagine the graph at the upper left is pizza The max point is the max amount of pizza one man can eat Utility goes down after that point since he is full The left shows demand decreasing as price increases This is the 339 income effect The higher the price goes the less you can afford 2 v pizza the more demand decreases I COULDN T BUY AS MUCH Quantity Demanded It THE MONEY DOESN T GO AS FAR Izo means the same To compare two different goods and utility we use a different graph with one good on the x axis and another good on the y axis and then inserting many utility curves called indifference curves to see which one matches the budget constraint Diminishing marginal rates of substitution As you eat more pizza you are more willing to give up pizza for hamburger Depends on your tastes and preferences If prices change and one good becomes relatively cheaper steeper slope on the graph then I substitute the now relatively more expensive good with the relatively less expensive good SUBSTITUTE AWAY THE MORE EXPENSIVE GOOD This makes our demand curve more complicated o ltL5gt o ltL6gt Income effect substitution effect and demand curves The demand graph is a graph where demand is de ned as tastes and preferences income and the price of any other goods involved 0 It is always downward sloping as price increases for the good demand decreases When the price of good2 goes up the demand for good1 goes up because of the substitution effect This causes the demand curve to shift outwards for good1 Compliments Budget constraint and indifference curve graphs can include an in nite number of variables which depends on all of the goods anyone ever consumes lPriczeFl 39 l l o ltL6gt


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