Robert Solow winner of 1987 Nobel prize in econ EC.pdf

Robert Solow winner of 1987 Nobel prize in econ ECONOMICS greek word of aikos (household) and Latin word nomus (system/management) -is the proper allocation and efficient use of available resources for the maximum satisfaction of human wants -is the science of choice -a scientific study which deals...

Robert Solow winner of 1987 Nobel prize in econ ECONOMICS greek word of aikos (household) and Latin word nomus (system/management) -is the proper allocation and efficient use of available resources for the maximum satisfaction of human wants -is the science of choice -a scientific study which deals with how individuals and society in general make choices -the study of how man could best allocate and utilize the scarce resources of society to satisfy his unlimited want - to learn how to maximize one's resources BRANCHES OF ECONOMIC microeconomics - deals with the economic behavior of individual units such as the consumers, firm, and the owners of the factory of product macroeconomic -deals with the economic behavior of the whole economy or its aggregate such as government business and household. TOOLS OF ECONOMICS Most economists are engaged in analyzing the different behavior of individuals, firm, producers, wnd use different scientific, approaches and utilize different tools fo be able to formulate theories and principles. Logic - a science that deals with sound thinking and their reasoning normative - without facts or data positive - with facts or basis Mathematics - a science that deals with numbers and their operation Statistics - a branch of mathematics engages with the analysis and interpretation of numerical data THE ECONOMIC RESOURCES LAND - these resources consist of free fift of nature whixh includes a natural resources above on and below ground such as soil, rivers, lakes, oceans, forest, mountain mineral resources and climate LABOR - refers to all human efforts that help to produce satisfying goods and resources CAPITAL - represents rhe monetary resoueces, companies usebto peuches nafiral resources land and other capital goods ENTREPRENEUR- rhe organiEr or coordinator of the other factor od production. They are the one who is engaged in economic undertaking the providers society with goods and services it jeeds FOREIGN EXCHANGE - refers to the dollar and dollar reserve that the economy has IDEA FOR BEYOND THE FINAL EXAM 1 people are forced to make choices / opportunity cost l 2 Attempts to repeal the laws of the supply and demand - the market strikes back 3 The surprising Principlebod Comparative Advantage 4 Trade is a win - win situation 5 The importance of Thinking at the Margin/Additional 6 Externalities - A shortcoming od rhe market cured by market methods/can't do anything 7 The trade of - Off between efficiency and Equal INSIDE THE ECONOMISTS TOOL KIT a. economics as a discipline more,social, than scientific, must be a jack of several trades, mathematical reasoning, statistics play a big role b. The need for abstraction - means ignoring many details so as c. Role of the economic Theory -theory is a deliberate simplification of relationship used to explain gow those relationship works/correlation/causation d. What is an economic Model - simplified, small scale version od an aspecy of fhe economy. Economic model are often exoressed in thr equation or graphs of in words. e. reason dor disagreement: imperfext information and value judgements - concerns on both sides of many public policy issue/reflects a misunderstanding of the nature od science/Many disputes among economists not scientific disputes at all