MGMT 202 1st Edition Lecture 12 Outline of Last Lecture I Economics vs Engineering II Neoclassic Assumptions About Humans III Macro vs Micro Economics IV Neoclassic Economists Outline of Current Lecture I Assumptions of Neoclassic Economics II Market Economies III Limitations with Classic Economic Thought Current Lecture Assumptions of neoclassic economics Government shouldn t intervene in economics it s unnecessary and inappropriate individuals can freely pursue their self interest like Smith s theories markets discipline private economic activity profit alone determines corporate performance success the primary contributions from firms to society are creating wealth jobs paying taxes and delivering goods and services Market economy should have choice competition efficiency Cell phone companies airlines and rental car companies are reducing in number Least you should have is 3 getting dangerously close to monopoly Negative externalities bribery administered pricing Limitations with classic economic thought Practical some parts of society are excluded poor damaging hazardous effects to individuals Theoretical Hosmer greatest good for greatest number accepts that there are people who don t get their rights or benefits people are treated as means to an end can be somewhat abused if profits are prioritized over people Combined cost effective analysis the end is already decided and we have to determine if the cost is worth it example cotton harvesting is very harmful to the health of the people harvesting it but worker safety is not the most important when weighed with cost supply demand and dependence effect what if supply is not a function of demand but vice versa
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