Microeconomics

Leeds, von Allmen and Schiming

Chapter 1, Introduction

1. What is Economics?

   1. Scarcity Principle: No Free Lunch Principle
   2. Cost - Benefit Principle
2. Microeconomics and Macroeconomics
3. Positive and Normative Economics
4. Market based (demand driven), centrally planned, and transition economies: How are prices determined?
   1. Jevons: Value of the good to consumers
   2. Marshall: Cost of production
   3. Modern thinking: It's both! Supply and demand:
5. Opportunity Cost
6. Cost Benefit Analysis
   1. Ben Franklin
   2. Rationality
   3. Opportunity Cost
   4. Economic Surplus
   5. Marginal Cost and Marginal Benefit
   6. Some Pitfalls in Decision Making
      1. Measuring costs and benefits as proportions (versus absolute amounts)
      2.  Ignoring opportunity costs
      3. Failure to ignore sunk costs
      4. Failure to understand marginal/average distinction
      5. Not all benefits and costs matter equally
7. Synonyms for marginal
8. Economic Models - Markets, industries, firms, individuals
   1. Assumptions - examples
   2. Ceteris Paribus
   3. Testing Hypotheses - The scientific method