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Micro Ecomonics Notes - Week One

by: Alicia Kohler

Micro Ecomonics Notes - Week One Econ 262

Marketplace > Fort Lewis College > Microeconomics > Econ 262 > Micro Ecomonics Notes Week One
Alicia Kohler

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About this Document

Discussing the first two days of discussion in class. On the 3rd day, there was a worksheet, so there are no notes.
Principles of Economics: Microeconomics
Stephanie Jane Owings
Class Notes
Econ, Microeconomic, Economics




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This 4 page Class Notes was uploaded by Alicia Kohler on Wednesday September 14, 2016. The Class Notes belongs to Econ 262 at Fort Lewis College taught by Stephanie Jane Owings in Fall 2016. Since its upload, it has received 3 views. For similar materials see Principles of Economics: Microeconomics in Microeconomics at Fort Lewis College.


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Date Created: 09/14/16
09/01/2016 ­ 09/07/2016 Micro­economics ____________________________________________________________________________ Discussion: Chapter 1: Introduction ● Microeconomics: Studying how the “smaller people” (families and  individuals) as well as small businesses (firms) interact with the two markets ● (the more indepth view of the economy) ○ Market and Command ● The government also tries to manipulate or control their decisions (Macroeconomics: Studying the entire world’s economy. More of a broad study including terms  such as econ growth, unemployment, and inflation). ● Incentives are highly effective! ○ If my econ professor offered free starbucks at my 8  am class, I would never miss a class! ● Law of unintended Consequences: If incentives are used,  unplanned outcomes may occur.  ○ If students find out my professor is giving away free coffee, more students will sign up for the class ● Scarcity: happens when resources are limited! (which is always) ○ Every resource is limited! ■ Coffee ■ Time ■ Gasline ○ We have unlimited wants with limited resources.  We want it all, but can’t have it  ○ Everyone must make choices and sacrifices  because of scarcity ­ The sacrifices we make are our Opportunity Cost ■ Definition of OC: the best choice you give up for something else ○ Companies (not just people) are affected!  ■ They must determine what they  spend their research and development into. ■ Starbucks needs to decide if they  spend their advertising on Pumpkin Spiced Lattes or Salted  Caramel Mochas ○ “There is no free lunch” ■ You are always giving something up  (OC) for something.  09/01/2016 ­ 09/07/2016 ■ If you go on a date, and they pay,  you are still giving up your time and efforts ○ Scarcity is the motivating force of the economy and  their systems ■ These systems work to decide how  resources will be used and distributed ■ Created 2 economic Systems:  Market Economy and Command Economy ❖ Market Economy (free enterprise): ➢ Citizens decide how the resources will be used ➢ Resources are given to those who are willing to pay the most. ■ If I am willing to pay 30 dollars for water bottle, and  someone else is willing to pay 25, I will get the water bottle ➢ Both parties must benefit in a market economy ➢ Only creates and sells products that the buyers want! ■ If the people don’t want it, they won’t buy it,  therefore the business will fail ❖ Command Economy (Centrally Planned Economy): ➢ Government chooses the fate of the resources ❖ Mixed Economy: ➢ The truth is, there is no true Market or Command Economy. Most  are mixed! ➢ The US is seen as a Market Economy, but about 20% Command ■ Gov employees = 15% of labor force ➢ China is slowly becoming less of a command economy ➢ North Korea is the closest to a true Command ❖ Index of Economic Freedom ➢ A chart created to show where a Market lays in regards to the two  ➢ Composed of 10 considerations 1. Business Freedom ­ the easier it is to create a  business, the freer the Market 2. Trade Freedom ­ looks at tariffs ­ the easier it is to  trade =  higher score 3. Fiscal Freedom ­ Looks at taxes ­ lower  taxes=higher score 4. Government Spending ­ the higher, the lower index  score 5. Monetary Freedom ­ Inflation ­ the higher the  inflation rate = the lower the score 6. Investment Freedom ­ the easier it is = higher the  score 09/01/2016 ­ 09/07/2016 7. Labor Freedom ­ minimum wage/ hours/  8. Freedom of Corruption ­ the more corruption=lower  score 9. Property Rights ­ the more you have = higher score 10. Financial Freedom ­ the more there is = higher  score ➢ Economists assume: ○ People weigh pros and cons to make a choice ○ People will take advantage of incentives ○ We make choices on the “margin” ____________________________________________________________________________ Discussion: Chapter 2 ­ Graphing: ● Graphs are like “maps” ○ Simplified, but not exact. ○ They do not equal the actual territory ­ just an idea of it ○ Constant ­ life changes, maps are still ● Graphing terms: ○ Vertical axis ■ Up and down ­ like your vertebrae ○ Horizontal axis ■ Side to side ­ like the horizon ○ Origin ■ Intersection of x and y  ■ Both values are 0 ○ Indirect Relationships ■ Variables going different ways ■ Slope is negative ○ Direct Relationships ■ Variables going the same way ■ Slope is positive 09/01/2016 ­ 09/07/2016 ____________________________________________________________ Discussion: Chapter 3: Production Possibility Frontiers ● No notes


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