ECON 142: Week 1 Notes
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This 2 page Class Notes was uploaded by Cindy Nguyen on Friday February 5, 2016. The Class Notes belongs to ECON 142 at Kansas taught by Dr. Brian Staihr in Spring 2016. Since its upload, it has received 236 views.
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Date Created: 02/05/16
Page 16 Economics – choices people make to attain their goals given their scarce resources Microeconomics – single person, firm, or industry Macroeconomics – economy as a whole, unemployment, inflation, deficit, debt Page 14 How does a person, firm, industry allocate resources? Difference between equity (fairness) and efficiency (no waste) Page 4 – 5 Three ideas: People are rational (logical) – do what’s in best interest People respond to economic incentives Optimal decisions are made at the “margin” Page 7 Margin – a small increment, one more unit, extra, additional At the margin: benefits vs. costs Examples: Studying a little bit more for your first exam Letting one more guest stay in a hotel Page 8 Trade Off Opportunity cost – value of the thing you didn’t do Book definition for opportunity cost – value of the next best alternative Markets and Market Economy A market is a set of buyers and sellers whose actions affect the price of product/service Page 13 Normative vs. Positive Analysis Normative – a statement that is based on judgment/opinion/etc. that makes a valued argument; qualitative; subjective Positive – a statement based on numbers/facts/logic that can be proven/disproven; quantitative; objective Page 11 Allocative vs. Productive Efficiency Productive Efficiency – occurs when a good or service is produced at the lowest possible cost Example – when competition among firms force firms to produce at the lowest possible cost Allocative Efficiency – production is in accordance with consumer preferences Example - voluntary exchange among firms and consumers results in firms producing the mix of goods that consumers prefer the most Page 9 Market Economy vs. Centrally Planned Market Economy – decisions of households and firms interacting in markets allocate economic resources Example – capitalism; laissez-faire Centrally Planned – decides how economic resources are used
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