MAE101 Topic 1 - Economic Principles

Economics is a science:
1. Theory - tries to explain events in the real world.
2. Data - does the data confirm/reject the testable propositions
3. a social science
  1. Economics is the study of how we make choices.
  2. We collect data based on peoples actual decisions or behavior.
the study of how society allocates scarce resources.
Positive vs Normative Statements
1. Positive - statements based on fact or something that can be proven
2. Normative - statements based on opinions
Allocation Methods
1. Price - good allocated willing and able to pay
  1. ie. cars, house
2. First-in Best-Dressed - arrives first/sooner, even if later-arriving individual willing and able to pay more for it
  1. ie. parking spaces
3. Set Aside/Qualification (equity) - individual who meets certain pre-determined criteria
  1. ie. University, Handicapped parking
4. Lottery - winner(s) of the lottery
  1. World Cup soccer tickets
Markets
1. a place where buyers and sellers meet
2. Types
  1. Stocks/Bonds
  2. Commodities/Currencies
  3. Housing
  4. Loans
  5. Labour
  6. Education
Economic Models
1. Objective, Constraint, Maximize, Environment
2. RULE of 2
  1. Compare
    1. Environment
    2. Indivdual
  2. Analysis - 2 competing forces
    1. ie. demand and supply

Resource summary

	Created by Doug Ithier about 8 years ago