Microeconomics 2010 Edward Morey August 25 2014 So what is microeconomics The intent of the course is to introduce microeconomics Let s make a first attempt at defining it Microeconomics is a set of theories models that try to explain the behaviors decisions of individual economic agents that is the goal is modeling explaining and predicting the behavior of individual decision makers economic agents Economic agents you other people firms the government families your dog and my dog And how the inter related behaviors of all those economic agents collectively determine what is produced how those products are produced and who consumes what Macroeconomics in contrast attempts to model behavior on a very aggregate level the total amount produced in how many people are working not working the consumer price index etc Many of the goals of microeconomics are similar to the goals of psychology and sociology explaining why people do what they do how they interact and the outcomes of those interactions My name is Edward I am an environmental economist a statistician someone who models behavior I also have a strong interest in ethics In explanation Much of my research is on the environment In addition I teach statistics to Ph D students a good way for me to learn statistics For the five years or so I have become interested in how one determines good from bad moral philosophy as it relates to economics I also study happiness I suffer from enochlophobia and laliophobia so try not to scare me There are two web pages for the course My web page for the course http www colorado edu economics morey 2010 2010home html and the Aplia web page for the course at http www aplia com You need to sign up for Aplia where you will take your quizzes all online and where the book lives There are at 5 T A s for the course 2 graduate T A s and 3 undergraduate T A s There are no recitations the first week of class recitations will start next week If you need their help this week with Aplia or anything else email one of them their emails are should be on the course web page in a day or two but first ask a neighbor The T A s will introduce themselves on Thursday Before we proceed and you start studying keep in mind the warning of Dr Frankenstein the guy who created the monster in Mary Shelley s famous book Study had before secluded me from the intercourse of my fellow creatures and rendered me unsocial So don t study too much study exactly the right amount You want to study the efficient amount from your perspective 1 An introduction to explaining behavior preferences constraints choices and how economists think Microeconomics is a lot about explaining modeling and predicting behavior How many of you were in a committed relationship on June 1st How many of you are still in that same committed relationship Why or why not see the Onion article Thousands Of High School Sweethearts Prepare For Post Graduation Breakup A number of my friends have recently changed spouses some very quickly Another friend only dates married women he has commitment issues Are these choices or not Remaining in the same relationship can be a choice a choice that continues for as long as the relationship continues That said being in a relationship might not be a choice maybe your significant other will shoot you if you try and leave making your relationship a constraint rather than a choice at least for you The distinction between choices and constraints is important and critical to explaining behavior So how does one decide whether to stick with the old wife and 6 kids or switch to a new wife who only has 3 kids for a total of 9 kids At my age there are always kids a constraint Or whether to keep the old boy friend back in Grand Junction or take your chances at CU or try to do both It is amazing what you can do with texting sexting and Skype Skype and texting greatly decreases the cost of maintaining the distant relationship but they also increase the probability that your significant others will find out about each other Note that most people choose to be in only one sexual relationship at a time but of course there are exceptions and the length of time one in involved with the same person can vary from minutes to decades Note that being exclusive can be a constraint rather than a choice For example one might be exclusive because of cultural or religious constraints maybe for you it is a sin to have multiple partners One might also be exclusive because no one else will have you your opportunity set has only one person in it your significant other Some statistics Of males between 20 and 24 14 2 had no sexual contact with other people in the last 12 months 55 2 had one sexual partner mostly with a member of the opposite sex and 33 3 had two or more partners The rest were un ascertained The number for females between 20 and 24 are 12 5 59 3 and 21 6 So more females have had sex but with fewer partners Are these percentages consistent with the male percentages Some of the costs and benefits of dumping the old one Dumping can be emotionally risky unless you monkey bar don t let go of the old one until you have one hand on the new one The old one is reliable but a bit boring He she loves you or at least likes you He is kind of cute but could lose a few pounds He is starting to look and act old And there might be someone better out there just waiting for you to appear Ms T Swift John Mayer Amanda Seyfried Andrew Garfield Mr S Combs And dumping George might turn him into a crazed stalker someone who texts pleas hundreds of times a day or worse Why is George more likely than Georgina to get violent How would an economist describe how the dump decision is made Your first reaction might be to say that economists do not enter into social relationships so economists are clueless as to how these decisions are made so anything they say should be ignored Fair enough except you are in a class taught by an economist Hint Economists assume believe that people are rational even when it comes to love and sex That is the individual knows her preferences knows what will make her better off knows her constraints and does what is in her own best interests Is this always true for love and sex Consider the mental processes of a drunk aroused eighteen year old male Is economic rationality true for the purchase of a washing machine For the choice of a partner Many psychologists think the economic assumption that humans are rational is unfounded not based on the