ECONOMICS - “Science of scarcity”. - the study of the choices people make in an effort to satisfy their unlimited needs and wants from limited resources. The science of “scarcity”. Is There A Social Cost. To Extended Unemployment?. Is There A Social Cost To Extended Unemployment?
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-the study of thechoicespeople make in an effort to satisfy
their unlimited needs and wantsfromlimited resources.
The science of “scarcity”
To Extended Unemployment?
Here Is What Happens.
With pressure from
bill collectors (and his
wife),he holds up a
7-11 & shoots a clerk.
Then, after many
becomes a reluctant
At first the job seeker
for his next job.
And – the Texas
Justice System will
tell him to,
And his kids will
cry because they
no longercan go
to private school.
Eventually he is
Let’s take a look at his college transcript.
President Bush’s College Transcript economics?
Gov 73 /71
Econ 71/ 72
“So - If your son or daughter is having ahard
time in economics, don’t worry about it. They are
on schedule to be President of the United States.”
Kerry’s overall college ave. was 76.
Overall average 77
Law of Demand [Change in QD] economics?
Reasons For Downsloping “D” Curve
1. Income Effect –current buyers buy more.
2. Substitution Effect– new buyers now purchase.
3. Diminishing MarginalUtility - because buyers
of successive units receive less marginal utility,
they will buy more only when the price is lowered.
Change in QD
1. Price change
[up/down the demand curve]
3. Point to point [along the curve]
“D”refers to the“whole curve”.[“all prices”]
“QD”refers to a“point on the curve”
based on a“particular price.”
“Demand Shifters” [TIMER] economics?
1. Taste [direct]
2. Income [normal-direct] [inferior-inverse]
3. Market Size [number of consumers-direct]
4. Expectations [of consumers about future *price-direct,
about future availability-inverse, or about future income–direct.
5. Related Good *Prices [substitutes-direct] [complements-inverse]
Changes in “D” [curve]
1. Non price change [“TIMER”]
2. Whole “D” curve shifts
[There is a change in “QD” but it is
not caused by a change in “price.”
[QD-”single price”; D-”all prices”]
Change in AD
1. “Non price Level” change-either C, Ig, G, or Xn
2. “Whole AD curve” shifts
[There is a change in AQD but it is not caused by
a change in price level.]
Mariah Carey Concert
Let there be more
Macro Law of Supply ["Law of AS"] economics?
Price Levelincreases; AQSincreases
Price Leveldecreases; AQSdecreases
“AS” refers to the “whole AS curve” & refers to “all price levels”
“AQS” refers to a “point on the AS curve” & refers to a “particular price level”
Change in “AQS”
1. Price Level change
2. Movement (up/down) “AS” curve)
3. Point to point (along “AS” curve)
Reasons For Upsloping “AS” Curve
1. There is increasing opportunity cost if firms don’t produce.
2. Current producers produce more [overtime/more shifts]
3. New producers are attracted to the market.
Tax $ economics?
Ben Stein’s part in this
movie as a boring econ
prof was voted one of the
50 most famous scenes
in American film.
Ben Stein [from “Ferris Bueler’s Day Off”] graduated from
Columbia University in 1966 with a degree in economics
and from Yale Law School in 1970 as valedictorian. He was
a speech writer for Nixon. He has written 16 books, including
his latest humor book, “How To Ruin Your Life”.
There is aSRPC[output prices are changing]and a LRPC
[output & input prices chg after unanticipatedinflation or disinflation]
LRPC- when unemployment = the natural rate and there is
no tendency for PL to be incr/decr. PL is stable & contracts reflect it.
My salary just isn’t keeping up.
Let’s say thatinflation
has averaged3% forthree
years. 3% is anticipated.
Wow, my raise exceeds inflation.
But my raise
was only 6%.
But when it comes time to sign
a new contract, his boss says …
It can’t get any better.
My raises exceed inflation.
Let’s say thatinflation
has averaged 9% for
the past few years.
9% is anticipated.
But my salary went up by only 3%.
0 2%4%6%8% 10%