OSU ECON 4001.03 - Ch1-Introduction (25 pages)

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Ch1-Introduction



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Ch1-Introduction

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Pages:
25
School:
Ohio State University
Course:
Econ 4001.03 - Intermediate Microeconomic Theory
Intermediate Microeconomic Theory Documents

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1 Introduction The Allocation of Scarce Resources What is microeconomics Why should we study microeconomics Microeconomic modeling Modeling elements Key analytical tools Normative and positive analysis Calculus prerequisite 1 Allocation of Scarce Resources Scarcity implies trade offs Resources workers raw materials capital and energy are available in limited supply Which goods and services should be produced How should we produce those goods and services Who gets to consume those goods and services Decision makers Individuals consumers Firms Government 2 Prices determine resource allocation Which goods How to produce Who gets them Prices answer these important questions by influencing decision makers Markets A market is where interactions between consumers firms and the government occur Prices of goods and services are determined in a market Applications Flu vaccine Twinkie tax 3 What is Microeconomics Economics is a science on how to allocate limited resources to satisfy unlimited human wants Microeconomics is the study of the economic behavior of individual economic decision makers such as a consumer a worker a household a firm or a manager This study involves both the behavior of these economic agents on their own and the way their behavior interacts to form larger units such as industries labor unions or markets 4 Why Study Microeconomics To learn a systematic analytical framework which can serve as foundation for studies of other fields in economics Perspective e g preferences technologies welfare criteria Benchmark or references e g perfect competition Approaches e g partial or general analysis To use this framework to make sense of the world around us Economic phenomena e g B2B internet markets Policy analysis e g polution minimal wage taxes and subsidies health care programs regulations 5 Microeconomic Modeling Models are abstract from complexities of the real world trying to capture the essentials An economic model is an abstract description of how an



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