ECON 211 Lecture 1: Aug 19 Notes: The Economic Model
17 views1 pages
ECON 2110: Introduction to Microeconomics Notes August 19th
BACKGROUND: Adam Smith -- father of economics -- book 1776)
Has to do with the individual (micro)
What happens when individual consumers and producers interact in the
marketplace? ex: Gasoline: high demand, high cost, low supply = high price
Provides a model for human behavior
The economic model summed up ------- PEOPLE RESPOND TO INCENTIVES
The people make decisions by comparing benefits v costs
“Benefits” “Costs” ---- broad terms
Happiness = benefit
Money = benefit
Sadness = cost
The economic model can address different questions:
Why has the price of soybeans fallen?
Why has the price of NFL tickets risen?
Why do U.S. families have fewer children today?
What is it not????
cars & safety features -- does it affect how drivers drive?
Hypothesis - safer car = faster speeds
Test - what do we expect to find?
Fewer deaths (driver/passenger)
More pedestrian deaths
^^^^^^^^^^^^In total, same # of deaths