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Intro

Intro. Microeconomics. Definition/Origin. Economics: The study of how society manages its scarce resources. From Greek ‘ oikonomos ’ meaning household management Current form stems from ‘political economy’ to which more mathematical rigor was added.

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Intro

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  1. Intro Microeconomics

  2. Definition/Origin • Economics: The study of how society manages its scarce resources. • From Greek ‘oikonomos’ meaning household management • Current form stems from ‘political economy’ to which more mathematical rigor was added.

  3. Micro vs Macro: study of agents, ind. Mktsvs unemployment, inflation, growth etc. • Normative vs *Positive*: what ought to be vs what is • Use of Models/Assumptions/*Ceteris Paribus* • All else being the same

  4. Scarcity: unlimited wants/limited resources • Trade Offs: more of one thing means less of another • *Opportunity Cost*: what you give up (your best next thing), not just dollar amount • example

  5. Think Like an Economist • Ignore Sunk cost (let bygones be bygones): example • Think at the Margin : Hiring Example • Diminishing/Increasing Margins : Example

  6. Constant Marginal Cost Increasing Marginal Cost

  7. Decreasing Marginal Happiness

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