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CLASS NOTES FOR ECONOMICS 251

DR. WILLIAM SHINGLETON

FALL 2005

THESE NOTES ARE FOR THE WEEK OF AUGUST 23-25

INTRODUCTION AND ORGANIZATION CH 1-2

SYLLABUS

WEBSITE: www.oocities.org/wsirius30

QUESTIONS ANY TIME / HEARING

CELL PHONES OFF

ROSTER

I D CARDS

NAME SIGNATURE PHONE

E-MAIL

PERSONAL PHYSICAL

NO PREREQUISITES

FOR THE SECOND TIME AROUND

AND IN THE BEGINNING...HISTORY OF POLITICAL ECONOMY

THOMAS ACQUINAS

15TH CENTURY THEOLOGIAN

JUST PRICE

FAMINES

OPPORTUNITY COST/ONLY ONE PRICE

LONG RUN VS SHORT RUN POLICIES

SOMETIMES THERE ARE NO GOOD ALTERNATIVES

ADAM SMITH

1776 PROTESTANT MINISTER

INVISIBLE HAND

PROFIT DRIVEN BEHAVIOR

GREATEST GOOD FOR THE GREATEST NUMBER

WILLIAM STANLEY JEVONS

19TH CENTURY DENTIST

MARGINALISM: WATCH FOR THE CHANGES

PROFIT MAXIMIZATION

MARGINAL COST

MARGINAL REVENUE

ALFRED MARSHALL

SUPPLY AND DEMAND

EQUILIBRIUM/DISEQUILIBRIUM

ADJUSTMENT PROCESS IS MOST IMPORTANT

ECONOMICS IS APPLIED LOGIC / COMMON SENSE

THE PRICE OF A TIE

ECONOMICS HAS ITS OWN LANGUAGE

COST VS PRICE

MICROECONOMICS VS MACROECONOMICS

POSITIVE VS NORMATIVE ECONOMICS

WHAT IS VS WHAT SHOULD BE

POSITIVE IS TESTABLE

NORMATIVE GETS MORE EDITORIAL SPACE

WE CONCENTRATE ON THE POSITIVE

SCARCITY

WHAT IS SCARCE?

SCARCITY FORCES US TO MAKE CHOICES

CALLING THE POLICE

OPPORTUNITY COST

INDIANA (1999) 75000/PRISON 6000/EDUCATION

MODELS AS GUIDES

UNDERSTANDING THE REAL WORLD USING MAKE-BELIEVE

IDEALIZED/SIMPLIFIED VERSION OF REALITY

MODEL EXAMINES RELATIONSHIPS AMONG VARIABLES

USING GRAPHS TO EXPLAIN MODELS

TOOLS OF UNDERSTANDING

VISUAL REPRESENTATION

EQUATIONS OR FUNCTIONS OR CURVES

DO CUBS' WINS SELL HATS?

FUNCTIONS AND/OR CURVES AND/OR EQUATIONS

A CURVE IS A PICTURE OF A RELATIONSHIP

SHIFT VS LOCATION

PRODUCTION POSSIBILITIES

PRODUCTION POSSIBILITIES CURVE

DEFINE FACTOR OF PRODUCTION

ASSUMPTIONS

FULL EMPLOYMENT

EFFICIENT USE OF RESOURCES

ATTAINABLE VS NON-ATTAINABLE

BASIC ECONOMIC ISSUE: SCARCITY VS UNLIMITED WANTS

**SKETCH PPC: NORTH KOREA

EXAMPLE: OPPORTUNITY COST

PRODUCTION POSSIBILITIES CURVE APPLICATIONS

CIA AND SOVIET PRODUCTION/UNUSUAL TELEVISIONS

EFFECTS OF INVESTMENT

CAPITAL GOOD

LASTS MORE THAN ONE TIME PERIOD

REPRODUCIBLE

USUALLY MAN-MADE

MOVES THE FRONTIER

INCREASES FUTURE CHOICES

GROWTH AND DEVELOPMENT

SAVING/U.S. LAST/LESS THAN 5 PCT OF GDP

INVESTMENT/U.S. LOW/ABOUT 15 PCT OF GDP

EFFECTS

JOBS NO EFFECT

INCOME IS HIGHER

CAPITAL GAINS AND INVESTMENT

ATTAINABLE VS NON-ATTAINABLE

OUR PLACE IN THE WORLD

UNITED STATES

POOR FAMILY OF 4 INCOME $18,000

WORLD STANDARD

POOR FAMILY OF 4 INCOME $1,460

OUR $11 TRILLION

MOSTLY CONSUMER GOODS

INVESTMENT

GOVERNMENT SERVICES

NET EXPORTS

UNEQUAL DISTRIBUTION OF INCOME

WHO IS POOR?

CHARACTERISTICS

WHO IS POOR OVER TIME?

DYNAMIC PICTURE

OUR MARKET SYSTEM

PROPERTY RIGHTS

WASHING CARS

YOUR CAR

RENTAL CAR

LEASED CAR

VOLUNTARY EXCHANGE BENEFICIAL DISTRIBUTION

BOTH PARTIES GAIN: SMITH'S INVISIBLE HAND IN ACTION

MARKET ALLOCATION / PRICE RATIONING

EXAMPLE: OREO COOKIES

MARGINAL THIS, MARGINAL THAT

ALTERNATIVES

SOVIET LINES = WASTED TIME

POLISH APPLIANCES

MARKETS AS EXCHANGE

EXAMPLE: GARAGE SALE

MARKET MECHANICS

DEMAND/QUANTITY DEMANDED

SUPPLY/QUANTITY SUPPLIED

DISEQUILIBRIUM PRICES

EQUILIBRIUM PRICE

NEXT WEEK: SUPPLY AND DEMAND