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1. Mises Academy
Austrian Econ I:
Praxeology Through Price Theory
Robert P. Murphy
Spring 2011
Lecture 1
April 27

2. Austrian Econ I
1.How the Course Works
II. Purposeful Action
III. Implications of Action
IV. Classification of Goods
V. Mengerian Hierarchy
VI. The Role of Time
VII. Marginal Utility

3. I. How the Course Works

4. II. Purposeful Action vs.

5. A. “Action” as a Viewpoint

6. B. Some definitions
Praxeology: the study of human action.
(Contrast with “economics.”)
Means: alterable features of the
environment that can be used to achieve
ends.
(Contrast with “general conditions of
action.”)

7. C. Prerequisites of Action
●A subjective desire for improvement
(“uneasiness” for Mises)
●A theory of how to change the
situation (using means)
●Uncertainty about the future

8. III. Implications of Action

9. A. Only Individuals Act

10. B. Individuals Have Preferences

11. C. Preferences Are Subjective

12. D. Preferences Are a Ranking

13. IV. Classification of Goods
1. Producer Goods (aka Means of Production)
a. Land (aka Natural Resources)
b. Labor
c. Capital Goods
2. Consumer Goods
Includes leisure

14. V. MENGERIAN HIERARCHY
Consumer goods are “first order” or “lowest
order.”
Second-order goods are the land, labor, and
capital goods used to produce first-order goods.
Third-order goods are factors used to produce
second-order goods…

15. VI. The Role of Time

16. VII. Goods Valued “on the Margin”
vs.