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Boudreaux Week 3

by: Wesley Hunt

Boudreaux Week 3 econ 103-004

Wesley Hunt
GPA 2.88
Microeconomic Principles
Donald Boudreaux

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About this Document

A few portions of this were repeated in Week Four and will be included in that set.
Microeconomic Principles
Donald Boudreaux
Class Notes
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This 3 page Class Notes was uploaded by Wesley Hunt on Thursday September 24, 2015. The Class Notes belongs to econ 103-004 at George Mason University taught by Donald Boudreaux in Fall 2015. Since its upload, it has received 88 views. For similar materials see Microeconomic Principles in Economcs at George Mason University.


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Date Created: 09/24/15
Economic Theory Positive AnalysisquotPertaining to verifiable data Economic fact but not opinionated detailing Positive StatementObjective right or wrong regardless of opinion Positive Statements can be wrong Normative StatementsOpinionated statements not right or wrong regardless of if you agree Opinions are a part of human nature not worse than positivejust subjective Economics proper is about positive statementNot about what should be but what is Economics gives understanding of how the world operates in different levels of unemployment Economics can teach you how well your ideas work in a Positive Analysisbased world Values do not change but your ideas of how to implement them change Ceteris ParibusquotAll other things are the same Ceteris Paribus makes economic analysis easier by making one change and ignoring others eg lfl drop the marker it will fall all else unchancied underline is implied assumes nothing blocks it when we look at this slice we pretend everything else does not change and only in parts do we insert changes Be Aware of Fallacies Ad hominemquotby the man When the merits of an argument are determined by the identity of the speaker but not the logic of the argument itself Post hoc ergo Propter HocEvent A was directly caused by Event B simply because Event B happened first We live in a sequentiallybased world One thing does not always cause another Naturalistic FallacyIt is wrong to infer an ought from an is Do not thinkjust because something is the way it is means it has to be that way forever Do not draw morality from statisticsPeople put up with slavery for centuries because of this Naturalistic Fallacy is LAZY Fallacy of CompositionWhat is true for someone is true for everyone by design Styrofoam balls help identify carsDIDN T HELP WHEN EVERYONE HAD THEM Composition is the most common of economic fallacies most mistaken by misinformed reporters The opposite is also a fallacy Statistical Aggregation FallacyWhat happens in a statistical average is the truth for all individuals Average wage in an area can stagnate when everyone s goes up Be careful with averages It can be very easy to fudge them or be mislead by accurate info Adam SmithFather of modern capitalism and economics An Inquiry into the Nature and Causes of the Wealth of Nations Smith investigated why average wealth went up for some nations Not about povertyBack then everyone was poor Economics is obviousness made consistent and complex Wealth is the ability of men and women to gain access to goods and services to make their lives generally improved to not be forced to anything to have the right to enhance their lives what we all take for granted today Not about luxuries The fact that everyone has access to ordinary needs Smith noted some countries had more wealth Why is England more wealthy than Germany Nature of Wealth is the mere access to basic needs Causes are The wealth of nations is caused by the division of labour Specializationl Richer countries have more labour specialization Certain people just choose one job and practice being proficient in it Cause of Wealth of Nations is in more specialization diversity Not the only source but arguably the most important source Pin Factory Allegory A pin factory that employs ordinary workers gives 1020 pins per 10 workers but in Smith s time we now had one person doing one thing and only one thing in making the pins Pin factory with specialization makes about 43000 pins daily Total output of society is increased through specialization more is available for everyone Why Why do workers make so much when they work in a specialized manner 1 When workers specialize they save time by not moving from task to task 2 When people specialize they become more skilled at a task 3 When workers specialize it is more likely that someone will make a machine to do the job instead 0 The worker moves on to make something else 0 Machines are important because people do not have to


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