Why do economists say about smelly bathrooms in theAmsterdam airport? (Ch 2)
What do economists say about smelly bathrooms in theAmsterdam airport?
Why is economic difficult?
- There are three ways to express ideas in economic
We must be able to translate between forms of communication
When the price of coffee goes up, people buy les coffee
Q-P = 10 – 5
Economic is a social science
Social = people
Science = use scientific method
Two possible results
Microeconomics – individual household and firms and how they interact
Macroeconomic – study of economy-wide phenomena
Positive vs. normative analysis
• Positive is world “as it is”
• Normative is the work “as it should be”
1 Value judgement
Why are principle 6 and 7 different?
Efficiency vs. equity
• Efficiency is the size of the pie