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Principles of Economics I
George Washington University
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Class Notes

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ECON 1011 Lecture Notes - Lecture 1: Mercantilism, Simple Math, Dependent And Independent Variables

An axis is an abstract way of thinking about terms. Cartesian system is what we"re used to seeing in school, but it"s much more useful in economics to

ECON 1011 Lecture Notes - Lecture 1: Dependent And Independent Variables, Mercantilism

Slope: the relationship between the variables on the horizontal and vertical axis (eg. price and quantity) Giving up fun to increase your gpa: no relat

ECON 1011 Lecture Notes - Lecture 1: Mercantilism, Negative Relationship

ECON 1011 Lecture Notes - Lecture 1: Cartesian Coordinate System, Dependent And Independent Variables, Mercantilism

Cartesian plane (x,y: the cartesian plane is the standard, four-quadrant, plane often used to graph linear models, for economics, we will mainly be wor

ECON 1011 Lecture Notes - Lecture 2: Absolute Advantage, Opportunity Cost, Comparative Advantage

0=mx+b mx=-b x= it looks like a negative value, but it"s positive, because the m parameter has a constraint of being <0. If we added a negative sign

ECON 1011 Lecture Notes - Lecture 2: Absolute Advantage, Comparative Advantage, Opportunity Cost

ECON 1011 Lecture Notes - Lecture 2: Absolute Advantage, Opportunity Cost, Comparative Advantage

Describe rational human interaction using mathematical models. Mathematical model = a much simplified representation of reality. It takes fred 1 hour t

ECON 1011 Lecture Notes - Lecture 3: Comparative Advantage, Opportunity Cost, W. M. Keck Observatory

Advantage: answer: time- time is a valuable resource, as the common phrase goes time is money . By hiring a lower employee, this allows for our agent i

ECON 1011 Lecture Notes - Lecture 3: Opportunity Cost, Comparative Advantage

Idea that there are two countries, and that they are going to trade. No trade > do not capitalize on comparative advantage, no specialization will happ

ECON 1011 Lecture Notes - Lecture 3: Dd National, Opportunity Cost

We would usually talk about the benefits of trade compared to the benefits of specialization. For barneyville: before trade, fredistan produces 6 bb an

ECON 1011 Lecture Notes - Lecture 4: Demand Curve, Dependent And Independent Variables

Demand curves: a demand curve depicts the relationship between the price of a commodity and the quantity that consumers demand. In econ 1011, the deman

ECON 1011 Lecture Notes - Lecture 4: Demand Curve, Gotland Regiment

Shows the relationship between the price of a good and the quantity of a good that is wanted/demanded. (individual) demand curve. Shows the relationshi

ECON 1011 Lecture Notes - Lecture 4: Negative Relationship

ECON 1011 Lecture Notes - Lecture 4: Demand Curve, Dependent And Independent Variables, Negative Relationship

ECON 1011 Lecture Notes - Lecture 5: Inferior Good, Opportunity Cost, Normal Good

Five things that change demand curves: changes in preferences. Product = popular, unpopular > people willing/not willing to buy. Totally exogenous:

ECON 1011 Lecture Notes - Lecture 5: Poncho, Kfc, Normal Good

Factors that shift demand: preferences, price of a related good, substitutes, eg. If the price of tea increases, the demand of coffee is expected to in

ECON 1011 Lecture Notes - Lecture 6: Demand Curve, Whopper, Quarter Pounder

Change in supply vs change in quantity supplied: change in quantity supplied is affected by change in number of consumers, change in supply is affected

ECON 1011 Lecture Notes - Lecture 6: Price Ceiling, Economic Equilibrium, Demand Curve

ECON 1011 Lecture Notes - Lecture 7: Economic Surplus, Price Ceiling, Economic Equilibrium

ECON 1011 Lecture Notes - Lecture 7: Economic Equilibrium, Economic Surplus, Deadweight Loss

The difference between what an agent pays for a good and what an agent would have been willing to pay for a good. (eg. paying . 75 for a bottle of wate

ECON 1011 Lecture Notes - Lecture 8: Excess Supply

ECON 1011 Lecture Notes - Lecture 8: Price Floor, Demand Curve

ECON 1011 Lecture 9: ECON 1011 - Lecture #9 - Tax (continued) & Elasticity

ECON 1011 Lecture 9: Econ 9/25 Notes: More Taxes and Elasticity

Impose the tax on the supply side. Statutory incidence on supply side this time, instead of demand side. Incidence supply = 1 - incidence demand. It do

ECON 1011 Lecture Notes - Lecture 10: Negative Number, Marginal Revenue

Elasticity = (% change in quantity) / (% change in price) Law of demand: increase in price = decrease in quantity. Will always be negative number, so h

ECON 1011 Lecture Notes - Lecture 11: Trigonometric Functions, Marginal Utility, Demand Curve

Only two demand curves have constant elasticity values. At opposite ends of spectrum (completely vertical & completely horizontal ones) Any number

ECON 1011 Lecture Notes - Lecture 11: Demand Curve, Qi, Normal Good

Spectrum of sensitivity: the above graphs show 2 extremes in the spectrum. Therefore 13 is the point elasticity at point (3,9) (p = 3, q = 9). If = 1,

ECON 1011 Lecture Notes - Lecture 12: Marginal Utility, Demand Curve

Demand curve and elasticity: on a graph for p, where the maximum value of q is a, is unit elastic, the part of the line above (cid:2870) is elastic, an

ECON 1011 Lecture Notes - Lecture 14: Budget Constraint

We know that due to the allocation of all money, pxx + pyy = m. In this case, 2x + 3y = 20. In this case, for #1, x provides more utility, therefore on

ECON 1011 Lecture Notes - Lecture 15: Demand Curve, Indifference Curve

A curve on a graph (the axes of which represent quantities of two commodities) linking those combinations of quantities that the consumer regards as of

ECON 1011 Lecture Notes - Lecture 16: Demand Curve, Lead, Fixed Cost

There is no change in price for donuts, therefore we cannot identify the demand curve for donuts. Therefore, we can only identify the demand curve from

ECON 1011 Lecture Notes - Lecture 17: Fixed Cost, Variable Cost, Marginal Product

Types of inputs: fixed input, do not change with the quantity produced, we call them capital (shown as k , variable input, changes based on the quantit

ECON 1011 Lecture Notes - Lecture 18: Fixed Cost, Variable Cost, Marginal Product

Types of costs: fixed cost (fc) fixed input, capital gives us our fixed cost (k gives fc) (also shown as r = rent, variable cost (vc) variable input. L

ECON 1011 Lecture Notes - Lecture 19: Average Variable Cost, Average Cost, Marginal Cost

Eg. if tc = 16 + q2 and vc = q2. Since tc = fc + vc, fc = tc vc. Therefore 16 + q2 q2 = 16 = fc. Note: fixed cost has no impact on marginal cost as the

ECON 1011 Lecture 21: ECON 1011 Lecture : Long Run Costs, Economies of Scale & Revenue Curve

ECON 1011 Lecture Notes - Lecture 22: Marginal Revenue, Opportunity Cost, Marginal Cost

The revenue earned by increasing sales by one product. Breaking even: accounting profit, economics profit, all about opportunity cost. Eg. you graduate

ECON 1011 Lecture Notes - Lecture 23: Demand Curve, Marginal Revenue, Statics

The market supply curve is the summation of the marginal cost curves of all the firms in the market above the shutdown price. Requirements: large numbe

ECON 1011 Lecture Notes - Lecture 24: Demand Curve, Marginal Revenue, Statics

ECON 1011 Lecture Notes - Lecture 25: Marginal Revenue, Comparative Statics, Marginal Utility

Using comparative statics, we can see that the supply curve = mc curve, while the demand curve = mb curve. The last unit exchanged will be where mc = m

ECON 1011 Lecture Notes - Lecture 27: Marginal Revenue, Demand Curve, Economic Surplus

Monopoly: one seller & large number of buyers, no entry (homogenous goods) (not required) (perfect information) (not required) Slope of tr (a strai

ECON 1011 Lecture Notes - Lecture 28: Monopolistic Competition, Perfect Competition, Demand Curve

ECON 1011 Lecture Notes - Lecture 29: Pigovian Tax, Coase Theorem, Demand Curve

ECON 1011 Lecture Notes - Lecture 30: Productive Efficiency