MAE101 Lecture 1: MAE102-Summary-Notes
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Economics: (cid:862)is the stud(cid:455) of the (cid:272)hoi(cid:272)es people (cid:373)ake to attai(cid:374) thei(cid:396) u(cid:374)li(cid:373)ited (cid:449)a(cid:374)ts, gi(cid:448)e(cid:374) thei(cid:396) s(cid:272)a(cid:396)(cid:272)e (cid:396)esou(cid:396)(cid:272)es(cid:863) Market: (cid:862)a g(cid:396)oup of (cid:271)u(cid:455)e(cid:396)s a(cid:374)d selle(cid:396)s of a good o(cid:396) se(cid:396)(cid:448)i(cid:272)e a(cid:374)d the i(cid:374)stitutio(cid:374) o(cid:396) a(cid:396)(cid:396)a(cid:374)ge(cid:373)e(cid:374)t (cid:271)(cid:455) (cid:449)hi(cid:272)h the(cid:455) (cid:272)o(cid:373)e togethe(cid:396) to t(cid:396)ade(cid:863) Three key economic ideas: (assumptions: people are rational: Rational individuals weigh up the benefits and costs of each action, and they choose an action only if the benefits outweigh the costs: people respond to economic incentives: Economists emphasize that consumers and firms consistently respond to economic incentives. Pbs scheme use is increasing substantially, but medicines are not free because that would mean that patients and doctors of would not use medicine wisely: optimal decisions are made at the margin: It is (cid:396)a(cid:396)e that de(cid:272)isio(cid:374)s a(cid:396)e (cid:858)all o(cid:396) (cid:374)othi(cid:374)g(cid:859) Whether to get a job or go to university. But mostly in life decisions involve doing a little more or a little less.
