microeconomics lecture 2 notes
microeconomics lecture 2 notes Econ 201
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This 2 page Class Notes was uploaded by Kelsey Voelker on Friday September 16, 2016. The Class Notes belongs to Econ 201 at Towson University taught by Professor Baejter in Fall 2016. Since its upload, it has received 9 views. For similar materials see Microeconomics in Economics at Towson University.
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Date Created: 09/16/16
Microeconomics 9/8/16 Lecture 3 Essential Principles and concepts Value is subjective Trade creates value (wealth) The “invisible hand principle” Wealth is not fixed; people create it Capital The more capital we have, the more we can produce The more “tools” the better we can produce Wealth a limit? Is there a limit to human ingenuity? No There is constantly new inventions, new ways to use resources, recycle them, etc. so there may not be a limit as to how much wealth we can produce Scarcity Enough free from nature that can supply everyone’s needs The only good that is not considered scarce in the world, is air Because things are scarce is why we economize Implies rationingdecide how things will be used & who gets to use them o We ration things in market economy by willingness and ability to pay o Problem: some people are not able to pay o Positives: Products wont run out as easily Competition making others work harder Goods go to where they’re most valued (will treat it the best) Scarcityrationingcompetition Doughnut rationing exercise (how many ways) Cutting in little pieces Decide who didn’t eat breakfast Rock paper scissors Flip a coin Names in hat First come first serve Who got to class first Opportunity Cost Every action has one Every time we talk about the cost of something, you should think about cost as opportunity cost o All costs are fundamentally opportunity costs o Whatever else you could have done for that action/cost o Cost To whom? People are purposive people pursue their purposes, and try to do it at the lowest cost to themselves ex. The way the parking lot fills up in the morning at school (people pick the closest ones first) ex. Clothing on sale the number of articles sold will be higher economics regard that all people are self-interested (not selfish) economic reasoning Incentives matter basically what economics is when incentives change, people change their behaviors unintended consequence: ex. A seatbelt law passed to reduce number of car accident injuries but frequency of accidents went up and number of pedestrians hit went up due to a feeling of “safety” drivers were driving more recklessly. Marginal Thinking deciding between the benefit or cost “thinking at the margin”