Economics 201H (Section 5) Introduction to MicroeconomicsInformation about youWhat is Microeconomics?Slide 4PowerPoint PresentationSlide 6Slide 7Slide 8In-Class Exercise: Let’s consider replacing the U.S. economic system with one where everyone is paid exactly the same salary.EC 201H Fall 2001Economics 201H (Section 5)Introduction to MicroeconomicsProf. John GoddeerisOffice: 106 Marshall HallHours: M W 1:00-2:30 and by appointmentPhone: 353-6466E-mail: [email protected] http://courses.bus.msu.edu/ECON/201/005HEC 201H Fall 2001Information about youName (and what you would like to be called)Class year (Freshman, Sophomore,…)Where are you from?What are you studying (if you know)?Any previous Economics (including high school or AP)?EC 201H Fall 2001What is Microeconomics?A Social ScienceSocial: About people and how they interactScience: Develop theories to make predictions, test them against real dataWhat sets Economics apart? Scope and MethodEC 201H Fall 2001What is Microeconomics?Key concepts: Scarcity and ChoiceEconomics is the study of how society manages its scarce resourcesMicroeconomics starts with the individual–Usually assumes “rational” behaviorEC 201H Fall 20011. People face tradeoffs2. The cost of something is what you give up to get itEC 201H Fall 20013. Rational people think at the margin4. People respond to incentivesEC 201H Fall 20015. Trade can make everyone better off6. Markets are usually a good way to organize economic activityEC 201H Fall 20017. Governments can sometimes improve market outcomes8. A country’s standard of living depends on its ability to produce goods and servicesEC 201H Fall 2001In-Class Exercise: Let’s consider replacing the U.S. economic system with one where everyone is paid exactly the same salary.Would you personally favor such a system? Explain.What problems would exist?Are there mechanisms that could be enacted to overcome these problems?Who would benefit from this system?What jobs would be hard to
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