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by: Daniel Scovotti


Daniel Scovotti

Shirley Cassing

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About this Document

These are this week's notes for Microeconomics with Mrs. Cassing. Enjoy!
Shirley Cassing
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This 4 page Reader was uploaded by Daniel Scovotti on Friday August 29, 2014. The Reader belongs to a course at University of Pittsburgh taught by a professor in Fall. Since its upload, it has received 132 views.


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Date Created: 08/29/14
ECON 0100 5 5 Economists who were interviewed6 Economic Platforms N o Brainer Economic Policies Mortgage Interest Deduction If you pay mortgage interest you can pay less for your income When people have large mortgages they can use it against their tax This policy mainly benefits the rich Deduction for Employer Provided Health Insurance People working for a business get health insurance through their business and there are no taxes paid on that It tends to have people overuse the health system because it s an inkind health income It can be a misuse and allocation of resources Eliminate Corporate Pro t Tax The US has the highest Corporate Profit Tax One of the biggest problems is the rise in gasoline Eliminate all Income and Payroll Taxes Taxes tend to discourage activity The payroll taxes for Medicare and social care social security The government was in favor of a consumption tax They think some of the income pay roll tax can discourage people from working Levy a Tax on Bad Things Eliminate a lot of pollution related to automobiles Make Illegal Drugs Legal Because there are so many Wrong people that have ended up in prison If we got rid of criminalization we would have a better use of our resources Lecture Topics 0 Define Economics it s about the allocation of scarce resources 0 Economic basics Scarcity Choice Cost 0 CostBenefit Principle 0 Marginal Analysis and Decisions 0 Production Possibilities Frontier Microeconomics 0 The study of how households and firms make decisions and how they interact in markets Macroeconomics 0 The study of economywide phenomena including in ation unemployment and economic growth Scarcity 0 Never enough time money or energy to do everything we want or have everything we want 0 Scarce Resources Labor Land all the natural resources a country would have Capital Things that have been made that are used in a productive way ex Highway machinery equipment trucks moving goods across the country Technology How productive we can be and M Scarcity 9 Choice The existence of scarcity forces us to choose CostfBenefit analysis helps us choose Example 150 to buy with in Oakland Same item is 130 in Waterfront So you can have a 20 benefit if you went to Waterfront Is the benefit going to outweigh the cost Scarcity 9 Choice 9 COST The cost of something what you give up to get it Choosing one alternative over another has a cost associated with it OPPORTUNITY COST is the highest valued alternative that must be given up to attain something or satisfy a want Models Or Theory A model is a simplified description of reality used to understand real life situations Economists use the costbenefit principle as an abstract model of how an idealized rational individual would choose among competing alternatives CostBene t Subtleties Absolutes not proportions that matter Optimal how much decisions are made at the margin Is it worth eating 1000 worth and feeling uncomfortable after you swiped in to Market Central or are you going to eat up to your comfort level Ignore sunk costs What are the additional benefits from moving forward and what are the additional costs Production Possibilities Assumptions 1 Two Goods 2 Fixed Resources and Technology 3 Efficient Production Graph Quantity of Coconuts y axis and Quantity of Fish x axis 10 fish and their going to get 20 coconut and get 1 point Reducing resources in fish and moving them in coconuts and get 2 more points Gives us the productions possibilities curve going from 29 coconuts and curving down to 40 fish Known as a Concave Curve Claim Increasing Opportunity Cost by balancing out the amount of fish and the amount of coconuts Some resources are better at producing fish and some are better at producing coconuts and that all depends on the quantity of each thing produced Move from B to C you give up 10 coconuts to get 2 fish The Curve shape shows an increasing opportunity cost Points on the curve ABCD represent possible Production Points or Attainable Points Outside of those points are the Unattainable Points Inside the possibility curves are the Inef cient Points Not combining them which means you are not using all of your resources Summary Economics is a social science studying human behavior in particular the way individuals and societies choose among the alternative uses of scarce resources to satisfy wants and needs Limited resources force people to face tradeoffs Choosing one alternative over another generates a cost opportunity cost Optimal how much decisions are made at margin Two simple models CostBenefit and PPF


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