Micro Notes 11/12

Microeconomics 1/12/12

positive and normative statements may be on test

Positive from Abortion article
-crime decreases
-sharp increase in abortions
-police spending decreases

Normative from Abortion article
-explosive politically (his opinion of his writing)
-policing may be making a difference (don’t use this sentence if asked)
-affect pro-life/pro-choice moderates

Policy implications are left to other people… Economists just give the facts

class after article

What is economics?
– study of decision making in the presence of scarcity
-scarcity is unlimited wants with limited resources (everything is scarce)
-decisions made by rational people
-rational: the benefit of doing something is more than the cost, the person does it; if benefit is less than the cost, they won’t do it (based on own believe of benefit)
-even heroine addicts are rational (their benefit is more than cost)
-trailer park boys with iphones (replace computer and land line)
-wife coach purse while pregnant
*marginal benefit and marginal cost*
list of resources
1. land- oil, ore, water, air
2. non-human animal resources- milk, eggs, leather, meat
3. labor- human capital (knowledge as in ignorance, skills, ability, IQ)
4. Capital- buildings, desk, computer
5. Technology- mass production (came from war), website, NOT computers
6. Entrepreneurial skill- ownership (management skill, etc.)
All of these resources together equal commodities
-commodities: goods and services
-opportunity cost(subjective): the best forgone alternative, opinion based
1. monetary- 4 years could work for $80,000/pay for college & get better return
2. time

3 questions to ask about an economy
1. what to produce
demand, if legal
2. how to produce
maximize profit, legally
3. who gets it
willing and able to buy

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