101 lecture 3

175 views

Published on

Published in: Technology, Economy & Finance
  • Be the first to comment

  • Be the first to like this

101 lecture 3

  1. 1. Microeconomics Lecture 3 Production Possibilities Frontier Exam 1 Review
  2. 2. What to make? How much to make? Who will make it? Who will consume it? Four Questions
  3. 3. How you slice the pie determines the size of the pie
  4. 4. Who decides? Government or Individuals
  5. 5. Planned Economy vs. Market Economy Government Economy vs. Individual Economy
  6. 6. Adam Smith Market Economy Individual Economy Karl Marx Planned Economy Government Economy
  7. 7. Adam Smith TheWealth of Nations 1776
  8. 8. Invisible Hand individual self interest promotes wealth
  9. 9. Price System is a Knowledge System
  10. 10. buyer and seller both win Voluntary Exchange
  11. 11. One Price Two values Every Exchange
  12. 12. Protect property rights What can government do?
  13. 13. the ability of an individual to own and control resources Property Rights
  14. 14. It’s cheaper to pay someone else than to do it myself Opportunity Cost is too high
  15. 15. 0 200 400 600 800 1000 0 200 400 600 800 1000 600 0 iPad iPhone Production Possibilities Frontier Efficient Combinations Inefficient Impossible with current technology New innovation helps iPhone New innovation helps both Now possible 520 200 400 400 250 500 0 600
  16. 16. Exam 1 review • Terms and Concepts • Formulas • Blog • Book • 25 multiple choice questions • No cell phones - bring calculator
  17. 17. Terms and Concepts • Scarcity • Choices • Tradeoffs • Rational • Incentives • Behavior • Utility • Margin • Markets • Circular-Flow Diagram • Production Possibilities Frontier • Macro vs. Micro • Positive vs. Normative • Absolute Advantage • Comparative Advantage
  18. 18. Formulas Percentage Change % ∆ New - Old Old

×