Class Notes (811,705)
Canada (494,883)
ECON 208 (190)

ECON 208: Microeconomics Analysis and Applications.docx

79 Pages
Unlock Document

Economics (Arts)
ECON 208
Mayssun El- Attar Vilalta

Microeconomics Analysis and Applications 9/2/2011 5:32:00 AM Mayssun El-Attar [email protected] Office Hours: Tuesday 10-11 am and Wed 10:30-11:30 am in Leacock 438 th Textbook: Microeconomics (13 Canadian Edition) by Ragan & Lipsey MyEconLab @ WebCT Online Participation (5% bonus for participation if you answer 50% of the questions) or go to paragraphe bookstore Course Description and Objectives: Basic economic principles and to show how they are applied Examine choices that individuals and firms and face How different market structures respond to these choices Outline The Basics o Fundamental concepts and approach o Competitive Markets Market demand, supply and price Elasticity of demand and supply Applications and competitive market efficiency Consumer and producers o The consumer side of economic side Utility maximization and consumer choice Income and substitution effects Consumer surplus and value o The producer side of markers Production and costs in the short run Production, costs and technology in the long run o Market structures and economic efficiency The perfect competition extreme The monopoly extreme, cartels, and price discrimination Between the extremes and strategic behavior Economic efficiency and government policy o Factor Markets o Government Intervention Market failures The economics of environmental protection o International Trade Specialization and gains from trade Trade policy rd Conferences with TAs to go over material (starting in the 3 week) Grading Final in December (75 100%) st Midterm on October 21 , in class (0-25%) Structure: Combination of MC and Short Answer Chapter 1: Economic Issues and Concepts 9/2/2011 5:32:00 AM The Undercover Economist the system has no leader but somehow works 1.1 Complexity of Economics Many economic transactions: shipments, final goods, raw materials, parts of cars, oils, local firms, manufacturers, people find work, earn incomes, own firms Economy is a complex system Adam Smith came to the conclusion that the interaction of self-interested people creates spontaneous social order the economy is self-organizing Self interest, not benevolence, is the foundation of economic order relatively efficient Efficiency refers to organize available resources to produce goods and services that people most value, when the most want them, and by using the fewest possible resources to do so An economy organized by free markets behaves almost as if it were guided by an invisible hand The key to explaining market behavior is that these decision makers all respond the same set of prices which are determined in markets that respond to overall conditions of national scarcity or plenty Main Characteristics of Market Economics Self-interest guides individuals; buy and sell what is best for them Individuals respond to incentive: want to sell more if price is high and less if price is low, buyers want to buy more when prices are low Prices and quantities are set in (relatively) free market in which individuals trade voluntarily are determine din free markets in which would-be sellers compete to sell their products to would-be buyers Institution, created by the state, protects private property and enforce contractual obligations private property, freedom of contract and the rule of law o Private property and contractual obligations are defined by laws passed by legislatures and enforced by the police an the courts Summary Economy: o A complex system that self-organizes in an efficient way How? o Individuals move by self-interest and incentive this determines market prices and quantities o This occurs within an institutional framework 1.2 Scarcity, Choice and Opportunity Cost Economics is the study of the use of scarce resources to satisfy unlimited human wants Resources usually divided into land (all natural endowments arable land, forests, lakes, crude oil and minerals) , labour (all mental and physical human resources entrepreneurial capacity and management skills), and capital (all manufactured aids to production tools, machinery and buildings) Economists refer to resources as factors of production Outputs are goods (tangibles) or services (intangibles) Production is the act of making goods and services Consumption is the act of using these goods and services Goods are valued fro the services they provide Scarcity and Choice Resources can produce only a fraction of the goods and services desired by people Scarcity implies the need for choice Resources are scarce and all societies face the problem of deciding what to produce and how much each person will consume societies differ in who makes the choices and how they are made but the need to choose is common to all Scarcity implies the need for choice choice implies the existence of cost (a decision to have more of something requires a decision to have less of something else) Every choice has an associated cost opportunity cost Every time a choice is made, opportunity cost is incurred Opportunity cost is defined as the benefit given up by not using resources in the best alternative way it is measured in terms of other goods and services that could have been obtained Production Possibility Boundary (PPB) Defined as a curve showing which alternative combinations of commodities can just be attained if all available resources are used efficiently ; it is the boundary between attainable and unattainable output combinations Illustrates 3 Concepts: o Scarcity: indicated by the unattainable combinations outside the boundary o Choice: indicated by the need to choose amount the alternative attainable points o Opportunity cost: indicated by the negative slope of the boundary The shape of the curve is dependent on each factor of production because each factor is not equally useful in producing all goods Example: Opportunity Cost of Your University Degree o Bachelors degree:
More Less

Related notes for ECON 208

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.