Introduction to micro economics technote
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Introduction to Micro-economics Technote. Creating a distribution; calculating a probability. Social science needs to add parts (individuals, firms, etc.) to create a whole. Market demand (private goods) adds horizontally Adding and summarising a group is a basic tool for all research

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Introduction to Micro-economics Technote

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Introduction to Micro-economicsTechnote

Creating a distribution; calculating a probability


Social science needs to add parts (individuals, firms, etc.) to create a whole

  • Market demand (private goods) adds horizontally

  • Adding and summarising a group is a basic tool for all research

  • We create a distribution of a group attribute (age) by counting members in categories

  • We can use a small sample to infer features of a population, provided the sample has important properties.


MARKET DEMAND ADDS INDIVIDUAL DEMANDS

Market demand curve


Distribution of Class Ages

  • Compute your age according to the hand out

  • Plotting the age in groups generates a distribution.

  • The wider the categories, the higher the count in each category, but the cruder the distribution

  • The narrower the categories, the sparser the count for a give group size.

  • Key attributes of any distribution are the mean (average) and variance (spread).

  • The graph defines a histogram


From distribution to probability

  • Define the area under the histogram/distribution as 1

  • This allows one to answer questions such as

    • What is the probability that some one is more than 19 in this class?

    • What is the probability that someone has an age between 16.75 and 17.50 years


Normal Distribution

Small variance

Large variance


The square root of the variance is the standard deviation


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