Economics 1051 Chapter 1 Notes
Economics 1051 Chapter 1 Notes Economics 1051
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This 3 page Class Notes was uploaded by Ashley Albers on Monday January 25, 2016. The Class Notes belongs to Economics 1051 at University of Missouri - Columbia taught by George Chikhladze,Martha Steffens in Spring 2016. Since its upload, it has received 73 views. For similar materials see General Economics in Economcs at University of Missouri - Columbia.
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Date Created: 01/25/16
Chapter 1 Limits Alternatives and Choices Introduction 0 Some of the issues economists study 0 O O O O 0 Effect of minimum wage laws on employment minimum wage laws have decreased employment Effect of corporate governance on rm pro ts Effect of teacher compensation on teacher productivity Do trade embargos achieve desired results ie one with Cuba from 19505 with Iraq and with Russia Does restriction between parent affiliate companies affect parent company s incentives to sabotage rival rms How does federal budget de cit affect our nations competitiveness in world markets how does it 0 O 0 Economic wants exceed our resources A social science concerned with making optimal choices under conditions of scarcity Study of how we make choices 0 The economic perspective 0 0 Thinking like an economist Key features Scarcity and choice 0 Resources are scarce we have to make decisions into different activities Choices must be made 0 Doesn t matter how much resources there is always a time constraint Opportunity cost 0 There is no free lunch while you re having lunch you could be doing something else Purposeful behavior 0 Rationalself interest 0 They are trying to maximize something 0 Individuals and utility 0 Le economies assume consumers try to maximize utility 0 Firms and pro t 0 But they actually maximize the pro ts spend money and hire in a way to achieve this objective 0 Government and public services Marginal analysis Marginal bene t 0 A lot of consumers think on a margin anytime you do something you always have to think how that extra time spent will bene t and how much it will cost ie study an extra hour but lose an hour of sleep Marginal cost 0 Marginal means extra 0 Comparison between marginal bene t and marginal cost how do rms maximize pro t How do they produce Theories Principles and Models 0 Economic principles and laws 0 Generalizations After economic model is constructed it is generalized for the masses supply and demand constructed on paper and hope it applies to all markets in the world Economic laws or principles after the generalizations law of demand if something becomes more expensive people buy less of it a law because it doesn t apply to something speci c like a product or type of consumer but applies to everything law of supply if something is produced at a lower price it is sold more 0 Otherthingsequal assumption 0 Graphical expression Microeconomics and macroeconomics o Microeconomics Decision making by individual units speci c consumersbusinesses A microeconomist would most likely study how consumers respond to changes in gasoline prices as opposed to something With income tax or money supply of the entire nation 0 Macroeconomics Aggregate Study of economies as a whole ie in ation deals with entire countries tariffs how the country uses them stock market effects entire country national debt effects everyone even future generations 0 Global Snapshot 0 Some countries aren t as fortunate as others 0 Average income of selected countries examples Switzerland 65430 USA 46360 France 42620 China 3650 Rwanda 490 People still have to make the same decisions no matter what their annual income is people in US have to pay for the same stuff people in Rwanda do choices just have to be made in terms of what s more important and more essential to someone s life Also have to consider that just because it s the average doesn t mean there s people living in those countries with astronomically higherlower incomes Some countries might also have drastically different costs ofiving so it may be easier to stretch the Chinese income versus stretching the US cost of living possibly but not necessarily ie Healthcare in US is drastically more expengve
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