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ANTH 222
Ronald Niezen

Microeconomics 208 972011 10000 PMMicroeconomics isChoice o Rational or irrationalTo do something that makes you happy regardless of Sunk cost is rationalThe individual economic units within the economy o Markets for individual goods and services o Individual consumers o Individual firmsWhat choices they make and how these are reflected in market behaviorHow different market structures respond differentlyWhenhowwhy government intervenes in the marketThe Study of the use of scarce resources to satisfy unlimited human wants Everyday Applications Taxi Permits o Value of permits went up when quota was made making it not worth it any more to join the taxi cab industryTickets to concert or party o You buy ticket to concert then find out about a party that same night You want to go to the party more Which do you go to It costs the same because you cant resell the ticket o Sunk costsomething you spent and cant get back o Dont feel guilt for sunk cost Back to Back Airline Tickets o Business traveler is less sensitive to price of ticket while vacation travelers are more sensitive Airlines make more expensive tickets for those who come and go during the week rather than on the weekendPrice DiscriminationAmsterdam airport o Painted flies on urinals to make men more accurate to save money on cleaning mens toilets o Responding to Incentivesboth men in bathroom and airport officials Fundamental Nature of EconomicsThe use of scarce resources to satisfy virtually unlimited wantsWe have to make choices Scarce anything that has an opportunity costOpportunity costwhat you have to give up o Price is a reflection of opportunity costNo good is not scarce Chapter 1 972011 10000 PM The Selforganizing economyFirms o After their Own benefit o After profitIndividuals o Consumers o After utilityYour own satisfaction o Respond to incentivesMarginal decisionsWhether you want to pay the extra Is it worth it to pay extraCan I get higher utility from spending the money in a certain way or by saving itWhether the extra unit is worth its opportunity costMarket sets priceso When individuals trade voluntarilyInstitution created by the state protect private property and enforce contractual obligations o Government must enforce to a certain extent o Must have law and orderSelfinterest not benevolence is the foundation of the economic orderMost economies today are mixed economies o Organized by invisible hand of price mechanism and some government intervention Command EconomyFirms are told what to produce and how much to chargeTends to fall apart and failVery rare now Efficient OrganizationOrganizing available resources to produce Goods and servieces GS people most value when they most want them using the fewest possible resources to do so Scarcity Choice and Opportunity Cost
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