principles-of-microeconomics-lecture-introduction

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1、Dr.KatherineSauerPrinciplesofMicroeconomicsECO2020I.Whatiseconomics?Economicsisthestudyoftheuseofscarceresourceswhichhavealternativeuses.Whatdowemeanbyscarce?Humandesiresexceedourresources.Whatdowemeanbyresources?time,money,freshwater,yourskills…Whatdowemeanbyal

2、ternateuses?Whatare3thingsyoucouldspendyourtimeon?Whatare3thingsyoucouldspendyourmoneyon?Whatare3careersyoucouldpursuethatwouldutilizeyourskills?Economicsstudiestheconsequencesofthedecisionsthataremadeabouttheuseofscarceresources.Decisionsaremadebyindividualsgro

3、upsfirmsgovernmentsMicroeconomicsfocusesonthedecisionmakingofeconomicactors(e.g.consumers,producers).Macroeconomicsfocusesoneconomy-widephenomena(e.g.unemployment).II.10BasicPrinciplesofEconomicsA.HowPeopleMakeDecisionsPrinciple#1PeopleFaceTradeoffsInfiniteoptio

4、nsforspendingyourtime…buttimeisscarce…youfacetradeoffs.Infiniteoptionsforspendingyourmoney…butmoneyisscarce…youfacetradeoffs.Thinkofatradeoffthatyourecentlyfaced.Whatweretheoptionsyouweredecidingbetween?Whydidyougowiththeoptionyouchose?Recognizingthatpeoplefacet

5、rade-offsdoesnotbyitselftelluswhatdecisionstheywillorshouldmake.Acommontradeoffforsocietyisbetweenefficiencyandequity.efficiency=gettingthemostoutofascarceresourceequity=equallydistributingresourcesPrinciple#2:TheCostofSomethingisWhatYouGiveUpToGetItBecausepeopl

6、efacetrade-offs,makingdecisionsrequirescomparingthecostsandbenefitsofalternativecoursesofaction.Costsarenotsimplymonetaryinnature.Theopportunitycostofanitem/actionincludesanymoneycostaswellasanyforgoneopportunities.Whatisyourpersonalopportunitycostofbeinginclass

7、today?Whatistheopportunitycostofacollegeeducation?Whatistheopportunitycostofspendingtaxdollarsonnationalhealthcare?Principle#3:RationalPeopleThinkattheMarginRationalmeansonlydoingthingswhenthebenefitsoutweighthecosts.Rationalpeopleknowthatdecisionsinlifearerarel

8、yblackandwhitebutusuallyinvolveshadesofgray.Thetermmarginalisusedtodescribesmallincrementaladjustmentstoanexistingplanofaction.(decisionsarerarelyall-or-nothing)While