Microeconomics Lecture Notes Week 1-2
Microeconomics Lecture Notes Week 1-2 ECON 2010
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This 4 page Class Notes was uploaded by Alexis Newcomer on Monday January 25, 2016. The Class Notes belongs to ECON 2010 at Western Michigan University taught by Bill Kern in Winter 2016. Since its upload, it has received 20 views. For similar materials see Principles of Microeconomics in Economcs at Western Michigan University.
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Date Created: 01/25/16
Chapter 1 Lecture Week 1 114 Microeconomics vs Macroeconomics What s the difference 0 Macro a very broad spectrum of the economy 0 Micro individual components that make up the economy Scientific Method Economic Models 0 Used for basic understanding 0 Economic Variables o What economic models are composed of 0 Some measure of economic activity 0 Ex interest rate value etc Presenting Models 0 Verbally o Graphically o Math Procedures of the Scientific Method 1 Observing realworld behaviors and outcomes 2 Develop a hypothesis cause and effect 3 Test your hypothesis natural experiment vs laboratory 4 Accept reject modify the hypothesis 5 Continue to test the hypothesis against the facts data Features of Models 1 Abstraction generalization 2 Assumptions a Ceteris paribus i Microapproach simplifying the problem piece by piece b Maximizing behavior i Ex maximize profits utilities c Market structure i 2 types of used cars cream puffs vs lemons The lndividual s Economic Problem 0 Limited resources 0 Time vs unlimited wants Model 0 Suppose I 10week Price of coffee 2cup Price of donuts 1 each Comte Gt v um 7 8MWM A izzzzw 4 unai bcdomiazwz 7 PM quotw if Iquot Societv s Economic Problem Production Possibilities 1 Fixed quantity of resources land labor capital entrep 2 Full employment 3 Technology constant 4 We produce only 2 goods Pizza Beer Opportunity Cost A 8 0 5 pizzabeer B 4 67 pizzabeer C 4 7 1 pizzabeer D 2 9 2 pizzabeer E O 10 Law of increasing cost Optimal Allocation What is the optimal point on the Production Possibilities Curve Sources of Growth Increase in resource supplies Technological change Adoption of growth supporting institution and policies Ordanizind Economic Activitv Four Fundamental Questions What to Produce How to Produce For Who to Produce How to Promote Progress PWNT Two Wavs of Ordanizind Economic Activitv Command economy socialist planned Market economy 0 Difference Market Economy no one is in charge decisions made by individuals Command Economy government in charge
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