Monday

 Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.

PART 7 Topics for Further Study
Chapter 22 of 36 Frontiers of Microeconomics
Section 2 of 18
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Economics is a study of the choices people make and the resulting interactions the choices have with one another.
The study has many facets, yet it would be a mistake to think all the facets present a finished jewel, perfect and unchanging.
Like all scientists, economists are always on the lookout for new areas to study and new phenomena to explain.
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This chapter on microeconomics considers three topics at the discipline's frontier:
1- The economics of asymmetric information
2- Political economy
3- Behavioral economics
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1- The economics of asymmetric information
Often in life some people are better informed than others, e.g. the seller can know some flaw in a product the buyer doesn’t.
This difference in information affects the choices people make and how people deal with one another.
2- Political economy
Political economy uses tools of economics to help understand the functioning of government and its involvement in economic matters.
There are instances when markets fail and government can potentially improve matters.
"Potentially" is a significant qualifier, whether this potential is realized depends on many factors.
Often the cost of unintended consequences is greater than the benefit of the government action, e.g. payment of unemployment benefits can encourage people to stay unemployed.
3- Behavioral economics
· brings insights of psychology to economic issues studies
· offers a view of human behavior more subtle and complex, and perhaps more realistic, than found in conventional economic theory
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potentially improve
senzai-teki ni kaizen suru
潜在的に改善する