Tuesday

 

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 15 of 15
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Chapter 22 conclusion.
Restated from Chapter 1, the Ten Principles of Economics:
1: people face trade-offs
2: the cost of something is what you give up to get it
3: rational people think at the margin
4: people respond to incentives
5: trade can make everyone better off
6: markets are usually a good way to organize economic activity
7: governments can sometimes improve market outcomes
8: a country's standard of living depends on its ability to produce goods and services
9: prices rise when the government issues too much money
10: society faces a short-run trade-off between inflation and unemployment
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Two of the principles are:
6: markets are usually a good way to organize economic activity
7: governments can sometimes improve market outcomes
The study of asymmetric information makes one more wary of market outcomes.
Study of political economy makes one more wary of government solutions.
Study of behavioral economics makes one wary of any institution that relies on human decision-making, including the market and the government.
If there is a unifying theme here it is that matters in economics, as in life in general, can be unclear and messy.
It’s common knowledge that information, markets, government, and people all are imperfect.
Economists need to understand these imperfections as best they can so they can make better suggestions to improve markets and government policy.
(End of chapter 22 of 36)
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Congratulations! 61%, 22 of 36 chapters, of way to becoming a competent economist.