lecture 1
Download
Skip this Video
Download Presentation
Lecture 1

Loading in 2 Seconds...

play fullscreen
1 / 6

Lecture 1 - PowerPoint PPT Presentation


  • 103 Views
  • Uploaded on

Lecture 1. Art of the Economic Argument. Methodology of Economics. Definition of economic issue or question May or may not be refutable Normative question: Not refutable The income distribution of Norway is superior to Canada Canada’s income distribution is inferior to USA

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about ' Lecture 1' - tarala


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
lecture 1

Lecture 1

Art of the Economic Argument

methodology of economics
Methodology of Economics
  • Definition of economic issue or question
    • May or may not be refutable
    • Normative question: Not refutable
      • The income distribution of Norway is superior to Canada
      • Canada’s income distribution is inferior to USA
      • What standard would you use to measure income distribution? Mean, Medium, ?
      • What is your prior ?
        • More (less) unequal is (better) (worse)
methodology of economics continued
Methodology of Economics Continued
  • Positive Economics
    • Price increase always leads to a quantity decrease
    • Model: Consumer Utility maximization
      • Axioms
        • More is preferred to less
        • If only two goods they must be substitutes
        • A rise in income then the demand for one or both goods must rise.
        • No saving
some questions normative or positive
Some Questions: Normative or Positive ?
  • Is globalization Good?
  • Is child labour good?
  • Is Free Trade Good?
  • Appreciation of home currency reduces exports
  • Which of the above questions are normative and why?
  • How would you go about answering them?
methodology of economics continued1
Methodology of Economics Continued
  • Propositions
    • U=F(X1, X2 …………..Xn)
    • S.T. Y= P1 X1 +P2 X2 +…….Pn Xn

Deduction:

Given Axioms and Propositions:

Delta Q /Delta P <0

Or Demand curve is downward sloping.

proof
Proof
  • Use data and approriate statistical technique
    • Price of salmon fell from $5.00/kilo to $1.00/kilo
    • Estimate own price elasticity of demand
      • -2.0
    • How much quantity is consumed at $1.00 in elasticity is =-2.0
    • 10 times as much as at $5.00.
    • Is this true?
ad