Economics Lecture from UC Berkeley
-
Upload
collin-gallagher -
Category
Documents
-
view
217 -
download
0
Transcript of Economics Lecture from UC Berkeley
-
7/29/2019 Economics Lecture from UC Berkeley
1/5
8/25/2012 4:19
OUTLINE August 27, 2012 Administrative Matters & Overview of Course
The Use of Economic Models
Economics: Positive versus Normative
Production Possibilities Frontier
ECONOMICS 1www.econ.berkeley.edu/~olney/fall12/econ1
Introduction to Economics
Professor OlneyAdministrative Matters & Overview Economic Models Positive & Normative Production Possibilities Frontier Administrative Matters & Overview Economic Models Positive & Normative Production Possibilities Frontier
Two Handouts Syllabus Exercise #1
Administrative Matters & Overview Economic Models Positive & Normative Production Possibilities Frontier
Administrative Miscellanea
1. www.econ.berkeley.edu/~olney/fall12/econ1
2. Piazza.com for questions
3. Enrollment handled by Head GSI Emiliano Huet-Vaughn
4. E-mails archived at bspace.berkeley.edu
5. Letter of Introduction for 2nd section meeting
Administrative Matters & Overview Economic Models Positive & Normative Production Possibilities Frontier
Question: Have you registered your iClicker aticlicker.com?A. Yes
B. Not yet
iClicker
i>clicker i>clicker2
-
7/29/2019 Economics Lecture from UC Berkeley
2/5
8/25/2012 4:19
Administrative Matters & Overview Economic Models Positive & Normative Production Possibilities Frontier
Reader at Copy Central on Bancroft Downloading instead?
Probably need New York Times subscription
Print out hard copy for section discussion
Question: Will you buy the reader ($20) or download thearticles?
A. Buy it ($20)
B. Download the articles
C. I havent decided
Administrative Matters & Overview Economic Models Positive & Normative Production Possibilities Frontier
Overview of Econ 1 Microeconomics
decision making by individual economic agents
Macroeconomics
the economy as a whole
Goal of course
Applicability of economics tools to real world
Administrative Matters & Overview Economic Models Positive & Normative Production Possibilities Frontier
Evaluating Policy
To evaluate any policy compare the policysresults with what would have been in theabsence of the policy
Yesterday(before the policy)
Today(with the policy)
NOT vs.
What todaywould have
been likewithout the
policy
Today(with the policy)
BUT insteadvs.
Administrative Matters & Overview Economic Models Positive & Normative Production Possibilities Frontier
Counterfactual
Counterfactual
What would have been in the absence of the policy
How do we know what would have been?
We use models
-
7/29/2019 Economics Lecture from UC Berkeley
3/5
8/25/2012 4:19
Administrative Matters & Overview Economic Models Positive & Normative Production Possibilities Frontier
Models are used to answer questions Characteristics of models
1. a question
2. simplifications and abstractions
3. assumptions about economic behavior
Ways to express models
1. words
2. graphs
3. equations
Administrative Matters & Overview Economic Models Positive & Normative Production Possibilities Frontier
Analyzing is not Judging Positive Economics
Normative Economics
Administrative Matters & Overview Economic Models Positive & Normative Production Possibilities Frontier
Criteria for Judging
Efficiency
Equity
Growth
Stability
What if goals conflict?
Your value system dictates which goals are more
important than others
Administrative Matters & Overview Economic Models Positive & Normative Production Possibilities Frontier
One Definition of Economics
Resources include
Land
Labor
Constraints
Technological
Institutional
Disciplined study of the allocation of scarce resources
Capital"
Knowledge
-
7/29/2019 Economics Lecture from UC Berkeley
4/5
8/25/2012 4:19
Administrative Matters & Overview Economic Models Positive & Normative Production Possibilities Frontier
Production Possibilities Frontier Question:
What are the general characteristics
of the possible combinations of output
that can be produced
in an economy
within a given time period?
Administrative Matters & Overview Economic Models Positive & Normative Production Possibilities Frontier
Production Possibilities Frontier Simplify: Only 2 types of output
Assume: No deliberate waste
We use all resources as efficiently as possible
Administrative Matters & Overview Economic Models Positive & Normative Production Possibilities Frontier
Example: Food & Machines Possible combinations of food (F) & machines (M)?
Opportunity cost of those 10 machines?
January February
100 machines2,000 units food
110 machines________ units food
Administrative Matters & Overview Economic Models Positive & Normative Production Possibilities Frontier
Opportunity Cost
Definition
Most desired activity foregone in order to do
something else
What are the opportunity costs of going tocollege?
-
7/29/2019 Economics Lecture from UC Berkeley
5/5
8/25/2012 4:19
Administrative Matters & Overview Economic Models Positive & Normative Production Possibilities Frontier
Opportunity Cost
Opportunity cost of those 10 machines?
January February March
100 machines2,000 units food
110 machines_______ units food
120 machines______ units food
Administrative Matters & Overview Economic Models Positive & Normative Production Possibilities Frontier
Law of Increasing Opportunity Costs
Opportunity costs increase because resources are
not ubiquitous
Administrative Matters & Overview Economic Models Positive & Normative Production Possibilities Frontier
Production Possibilities Frontier for this example
January: 100 M & 2,000 F
February: 110 M & 1,900 F
March: 120 M & 1,500 F
Administrative Matters & Overview Economic Models Positive & Normative Production Possibilities Frontier
Production Possibilities Frontier, in general