Econ 201 Week 1 Notes
Econ 201 Week 1 Notes ECON 2010
Popular in Principles of Economics: Microeconomics
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This 3 page Class Notes was uploaded by Leia Johnson on Saturday January 16, 2016. The Class Notes belongs to ECON 2010 at Drexel University taught by Professor Luck in Winter 2016. Since its upload, it has received 20 views. For similar materials see Principles of Economics: Microeconomics in Economcs at Drexel University.
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Clutch. So clutch. Thank you sooo much Leia!!! Thanks so much for your help! Needed it bad lol
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Date Created: 01/16/16
Chapter 1 ECON Notes What is Economics? - how to allocate scarce resources - can apply to various situations • should I take this class? • do I have the time? credit? - most inﬂuential social science - important ﬁeld to study and to understand - can answer many different questions • how education affects human capital - more education, more money, more likely to get a job - high remand leads to higher job wages • low supply of certain majors • shapes a person’s choice in what to study Microeconomics - study of how people make choices - how do their choices affect market outcome - understand how people behave and respond to incentive Basics Principles of Microeconomics - understanding how the economy and human behavior go hand in hand - 3 elements • principles of individual decision making • principles of how people interact • principles about how the economy operates as a whole - Individual Choice: the decision by an individual of what to do and what not to do - Basic Principles • resources are scarce • must give up real cost • take advantage of opportunities to make self better off • “how much” is the question at margin Scarcity - a resource is anything that can be used to make another thing - scarce- not enough of a resource to satisfy all productive uses - scarcity applies to resources and consumers (income, time) - Opportunity Cost- the fundamental cost in individual and society’s decision making • real cost of a good is the opportunity opportunity cost is crucial to understanding individual choice • • what’s in it for me? • things that are not tangible (time…) Opportunity Cost of taking this Class - tuition paid to attend classes - cost of books - time you could be spending something else (shopping, eating, sleeping) Marginal Analysis - the cost of one more _____ - hiring one more worker - working one more hour - eating one more bag of chips Incentives: anything that offers rewards to people who change their behavior • jobs in economics and STEM offer better pay - more students enroll in these majors • gas prices go up - people drive less or buy green cars Market Interactions - choices people make affect the choices of others Principles that underlie the interaction of individual choices - gains from trade - markets move towards equilibrium - resources should be used efﬁciently as possible - markets usually lead to efﬁciency - government intervention can improve welfare when market is inefﬁcient Resources - Efﬁciency: society is getting the most out of scarce resources - Equity: beneﬁts of these resources are distributed fairly - Economic policy needs to consider both efﬁciency and equity Market Failure - when markets fail to efﬁciently allocate resources - when people pursue self-interest, makes society worse off Positive vs Normative Economics - look at how the question is phrased - positive economics: the way things are - normative economics: the way things should be Example: Person wants to sell his kidney on eBay Positive Economic Question What determines the price of a kidney? Normative Economic Question Should he be allowed to sell his kidney at all? Example: Uber uses surge pricing to help market reach equilibrium Positive Economic Question What is the effect of surge pricing on demand and supply? Normative Economic Question Should Uber be allowed to use surge pricing and under what conditions?
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