ECN 211 Week 1 Notes
ECN 211 Week 1 Notes Ecn 211
Popular in Macroeconomics
Popular in Economcs
This 4 page Class Notes was uploaded by Jonathan Gonzales on Saturday January 30, 2016. The Class Notes belongs to Ecn 211 at Arizona State University taught by Stefan Ruediger in Spring 2016. Since its upload, it has received 27 views. For similar materials see Macroeconomics in Economcs at Arizona State University.
Reviews for ECN 211 Week 1 Notes
Yes please! Looking forward to the next set!
Report this Material
What is Karma?
Karma is the currency of StudySoup.
You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!
Date Created: 01/30/16
What is Economics? -What did you have to give up to come to class today? -What did you give up in order to go to school? -Point: You had to give up something to do anything (opportunity cost) -Study of how and why people make decisions -“Economics is the study of people in the ordinary business of life.” -Time is a scarce resource, so decisions must be made about its allocation -Habits are also relevant -Ultimately, all we care about is decisions Scarcity and Individual Choice -Opportunity cost describes relation between scarcity and choice -Virtually all production involves opportunity cost What sort of production doesn't? All production involves not using those resources elsewhere -Amazon is planing to lease planes from Bowing -Better at the business of selling things than owning planes -Money better spent on other things -Opportunity cost of college -Explicit costs, things directly spent -Implicit costs, things lost by giving up another option -Opportunity cost must account for both factors -Resources -Land -Almost never changes -Includes natural resources -Labour -Actual workers -Can change in a matter of hours -Capital -Physical things (physical capital) and knowledge/skills (human capital) -Investment is to add to physical capital, such as building factories or railroads -Entrepreneurship -Ability to generate revenue Scarcity and Individual Choice: Society -difficult to measure -Opportunity cost caused by scarcity of resources -Goals -High standard of living -GDP growth -Stable inflation Critical Thinking Question -Things are not necessarily set in stone; interpretation is essential Organisation of Economy -Markets allow resources to be allocated in certain ways -Trade is central to everything, includes trading labour for money or time for human capital -Microeconomics: Behaviour of individual people or groups -Macroeconomics: Looking at the entire economy Value of Economics -Helps to understand world, no matter one’s trade -To achieve social change -Very few jobs explicitly want economics majors, but economics provides useful skills Economics Notes Day 2: Scarcity, Choice, and Economic models • Most important thing: Opportunity cost • Applications • Review • Existence of scarcity and the allocation of scarce resources are among the central topics of economics • Markets organize economic activity, allocate resources • Assumptions and Models • Used to simplify the world • Land, labour, capital, is somewhat simplified • When discussing trade, assume two countries and two goods, because that’s enough to understand the concept • This is not realistic, but that’s perfectly fine • Model: A highly simplified representation of a more complicated reality • CircularFlow Diagram • Flow of goods, currency, and services through the economy • Two types of actors: • Households, private citizens and the like, • Own factors of production (Time, labour, etc.), sell/rent them to firms for income • Consume goods and services • Through owning a bank account with a return, households own the factors of production implicitly • Firms, businesses • Provide wages, rent, and profit • Two markets: • Market for resources • Factors of production, one’s work • market for goods and services • Things people buy • Critical Thinking • In 2010, 53,826 Americans died from the flu • During 20112012 flu season, 38.8% of people 18 and older got vaccinated • Healthy People 2020 states target of 80% flu vaccination coverage for persons 6 months to 64 years • Macroeconomic problem: Loss of human capital • How is the number of vaccinations related to the GDP? • Production possibilities frontier • Production Possibilities Frontier (PPF, also known as a Production Possibilities Curve) • Graph that shows combination of two goods an economy can produce, shows efficiency of economy • Points on the line are possible and efficient (all resources are fully utilized, points AE) • Points under the line are possible, but not efficient (some or all resources underutilized, unemployment and other unused capital, point F) • Points above the line are entirely impossible (necessary resources do not exist, point G) • Being an entirely selfsufficient society requires producing an average amount of everything • Recessions • Slowdown of overall economic activity • Unemployment, unused capital • Economy inside PPF • “There’s no such thing as a free lunch” • A meal provided for free still uses resources to provide it, thus society takes the cost • Free lunch only possible if operating within PPF • The PPF and Opportunity Cost • Opportunity cost of item is what must be given up to obtain that item • Moving along PPF is shifting resources from the production of one good to another • More of one thing not possible without giving up something else if operating on PPF • Slope of PPF shows the opportunity cost of one good in terms of the other • Economic Growth and the PPF • Economic Growth involves greater resources • Expansion of Land difficult, but technology may allow land to be used more efficiency • Expansion of Labour easy, possible with higher birthrates, lower death rates, and immigration • Expansion of Capital possible through new acquisitions and technology • Any and all of these expansions causes the PPF to shift away from the origin • Sometimes, a factor (such as technology) only increases the ability to produce a certain resource and not the other, but greater efficiency in one will allow for increased production of the other good • Changes in quantity or use of Land, Labour, and Capital • Shape of the PPF • It is possible for the curve to be bowshaped • If someone is best at something, it is unproductive for that person to do something else • If opportunity cost remains constant, the PPF is a straight line, however this is not realistic • If we are producing all wheat, and we want a computer, we assign the worst farmer to build computers rather than the best so that we lose as little wheat as possible
Are you sure you want to buy this material for
You're already Subscribed!
Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'