Micro 2
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This document provides an overview of Microeconomics Lecture 2 which covers tradeoffs, comparative advantage, and the market system. It includes 10 questions about key microeconomics concepts as well as a list of terms discussed in the lecture. The document contrasts the economic ideas of Adam Smith and Karl Marx, with Smith advocating for a market economy driven by individual self-interest and Marx advocating for a planned economy controlled by the government.
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Micro 2
- 2. Microeconomics Lecture 2 Tradeoffs, Comparative Advantage, and the Market System
- 3. 10 Questions 1. What is Utility? 2. What are the four elements in the circular flow diagram? 3. What is the difference between micro and macro? 4. What is the difference between positive and normative? 5. What is opportunity cost? 6. What is your highest alternative? 7. What is comparative advantage? 8. Do you have a comparative advantage over Bill Gates? 9. What is wealth? 10. What is the difference between the economics ideas of Adam Smith and Karl Marx?
- 4. Terms • 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
- 5. The most creative-destructive device ever invented
- 6. What is worth the most?
- 8. Tradeoffs Mileage Safety A 2001 National Academy of Sciences study estimated that the traffic death toll attributable to past downsizing was approximately 2,000 lives per year.
- 9. SimplifiedVersion of Reality Value in Prediction Economic Models
- 10. Change Incentives Change Behavior Incentives Matter
- 11. Incentives are more important than goals
- 14. Macro Micro
- 15. 1820 2016 Change Population 1 billion 7.5 billion 7.5 x Life Expectancy 26 years 72 years 46 + Income Per Capita Per Day $2 $30 15 x
- 16. Astonishing
- 17. U.S. Farmers 1800 - 90 percent
- 18. U.S. Farmers 1900 - 45 percent Gasoline engines replaced horses
- 19. U.S. Farmers 2012 - 2 percent
- 20. What happened to those 88 people?
- 21. If you want more wealth you more need productivity productivity requires innovation innovation requires inventions inventions require ideas ideas require people
- 22. What people want What is Wealth?
- 23. Wealth requires innovation Innovation requires ideas Ideas require people People are the ultimate wealth
- 25. Make other people happy Get Wealthy?
- 26. Every person has the power to create wealth
- 27. Because every person has the power to make someone happy
- 30. Access to the world’s knowledge Learn English
- 31. What if Steve Jobs had been born in Syria like his father?
- 33. $450 to $50 - 89% drop
- 34. What to make? Four Questions How much to make? Who will make it? Who will consume it?
- 35. How you slice the pie determines the size of the pie
- 37. Government Economy vs. Individual Economy Planned Economy vs. Market Economy
- 38. Adam Smith Market Economy Individual Economy Karl Marx Planned Economy Government Economy
- 39. Adam Smith Father of Economics Wealth of Nations 1776
- 41. Price System is a Knowledge System
- 42. Voluntary Exchange buyer and seller both win
- 43. Every ExchangeOne Price Two values Buyer value Seller value