ECON 203, WEEK 1 NOTES
ECON 203, WEEK 1 NOTES Econ 203
Popular in Principles of Microeconomics
verified elite notetaker
Popular in ECON
This 2 page Class Notes was uploaded by Isaac Lemus on Monday August 22, 2016. The Class Notes belongs to Econ 203 at University of Southern California taught by Giri Rahul in Fall 2016. Since its upload, it has received 80 views. For similar materials see Principles of Microeconomics in ECON at University of Southern California.
Reviews for ECON 203, WEEK 1 NOTES
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: 08/22/16
Econ 203g Lecture Notes 8/23: 10 principles of microeconomics ● So before anything else, what is microeconomics? To put it simply: it is the study of choices and tradeoffs. How to fulfill unlimited wants with limited resources: scarcity. We could be talking about an individual, community, or even from a global perspective. Economies have to choose what to produce, how to produce it, and how to allocate it. ● Principle 1: People face trade offs. Any decisions we make involves trade offs such as looking at efficiency vs. equality. Efficiency: Society gets the most from its resources. Equality: Having any prosperity be evenly distributed among its community. ● Principle 2: The cost of something is what you give up in order to obtain it, also known as the opportunity cost. Examples are money, time, resources. ● Principle 3: Rational People think at the margin. If someone is rational, they’ll make decisions systematically and purposefully, or they can make marginal changes to preexisting situations through incremental adjustments ● Principle 4: People respond to Incentives ( something that makes a person do something else). It can be either a reward or a punishment. ● Principle 5: Trade can make everyone better off. Hardly anyone nowadays is completely selfsufficient. People, communities, and countries can specialize at what they are good at and rely on trade and exchange to cover all aspects of their life. Lecture notes 8/25: 10 principles of microeconomics cont. ● Principle 6: Markets help organize activities. Economical markets are a collection of sellers and buyers. Together, their interactions determine what to produce, how, how much, and who gets them. In a market economy, A diverse and decentralized interaction of countless people and firms disperse resources. The invisible hand (individual actions of people) works through prices. Not everyone values items and aspects in a market equally. Markets adjust based on the reaction/response of those looking to buy. Without prices, markets would not work. Prices guide individuals. Prices make people and firms (who are self orientated) maximize economies well being. ● Principle 7: Governments can sometimes improve market outcomes. Governments can keep markets from falling and can protect property rights. Governments try to stop corruption and most monopolies (there are some government run monopolies though, like the DMV and drinking water. That type of stuff would suffer with competition.) The government's job is to promote equity. Other examples are rent control and unemployment insurance. ● Principle 810: I guess these principles aren’t important because we skipped them??? Chapter 2: Thinking like an economist ● There are two parts to an economist: Scientist and Policy Advisor ○ Scientist: attempts to explain the world (through assumptions and models) ○ Policy Advisor: Tries to improve ● Graphs of a circle flow diagram: How Firms and Households work together. Look at the table below and try to picture it as a continuous interchanging cycle. Frims Households Produce goods Supply factors of production Sell goods and services Buy and consume goods and services Hire people and factors of production Labor and capital (machines/things)
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'