5. UNLIMITED WANTS: More Time, More Fun, More Choices…
(Only Perfect Beings want nothing)
LIMITED RESOURCES: Time, Energy, Money…
6.
7. Economics is the study of how
people chose to use their scarce
resources in an attempt to satisfy
their unlimited wants
8. Scarcity exists when there is not
enough of something to satisfy
everyone’s wants at a zero price
9. How we prioritize and allocate our limited
income, time, and resources is the basic
economic challenge that has confronted
individuals and nations throughout history.
Capitalist solution is the Price Mechanism
Those who are willing to pay the price will
get the goods and services
10. All Scarce Goods Must Be
Rationed Somehow
RATIONING MECHANISMS:
Market Prices
Queuing
Most Favored Customer
Lottery
Equal Shares for All
‘Might Makes Right’
Merit
…
11. VIDEO: The Price Mechanism in Action
Impressions from a day in the City of New York
(“Koyaanisqatsi” 1982 Francis Ford Coppola, George Lucas)
12. Example: Supply of a big city. Millions of people all pursue their
own projects. Who coordinates? NOBODY
Process of impersonal social interaction is coordinated through
prices, that move up and down in response to supply and demand
Prices are signals that tell us what we have to do in order to be
useful for other people - This is how it was possible to create a
society based on the division of labour
Millions of people in society coordinate their plans through markets
Markets give us prices - prices give us knowledge.
We "see the world through prices"
Seeing the world through prices
13. Recognizing Order…
We rarely notice the existence of order in society and cannot
recognize the process of social coordination upon which we depend
every day. Urban traffic is an example of social coordination.
14. The Importance of Social Cooperation
• Civilization depends upon cooperation
• Thomas Hobbes (1588-1679): Leviathan(1651)
• Life without (strong) government would be "war of all
against all“
• Abstention from violence and robbery vs.
Positive Cooperation
(Will it develop automatically? Why should it?)
Whatsoever therefore is consequent to a time of Warre, where every man is Enemy to every man; the same
is consequent to the time, wherein men live without other security, than what their own strength, and their
own invention shall furnish them withall. In such condition, there is no place for Industry; because the fruit
thereof is uncertain; and consequently no Culture of the Earth; no Navigation, nor use of the commodities
that may be imported by Sea; no commodious Building; no Instruments of moving, and removing such things
as require much force; no Knowledge of the face of the Earth; no account of Time; no Arts; no Letters; no
Society; and which is worst of all, continuall feare, and danger of violent death; And the life of man, solitary,
poore, nasty, brutish, and short. (Leviathan 1651 Pt. I, Ch. 13)
15. The social contract theory holds that in earliest history man
lived in a "state of nature." No government existed. Each man
was only as secure as his own power could make him. By
agreeing with one another to make a state by contract, men
within a given area joined together, each surrendering
personal freedom as necessary to promote the safety
and well being of all. By this contract the members created a
government. The social contract gives rights and
responsibilities to both the citizens and the government.
For example, in The United States, citizens yield the powers
of punishment for criminal offenses to the judicial branch of
government. The government, for its part, bears the
responsibilities of maintaining public safety for the citizens
through the police and court systems.
Social Contract Theory
“Trading Liberty for Security”
16. Adam Smith (1723 – 1790) was the first economist who investigated how this
process of social coordination works: Rational, self-interested behaviour does not
produce chaos, but usually produces social coordination. „ An Inquiry into the
Nature and Causes of the Wealth of Nations“. First published in 1776, the book
offers one of the world's first collected descriptions of what builds nations' wealth
and is today a fundamental work in classical economics.
17. • How do people encourage one another to take precisely
those complexly interconnected actions that will
eventually produce all the goods and services that we all
enjoy?
• Even a society of saints must use some procedures for
inducing positive cooperation of the right kind.
Answer:
The “Invisible Hand” is the self-regulating mechanism of
market systems that generates allocation of resources
based on self-interest and competition. Market Prices
tend to direct individuals pursuing their own interests to
engage in activities promoting the economic well-being of
society.
The “Invisible Hand” of the Market
18. Cooperation Through Mutual Adjustment
Your choices and plans change the opportunities available to others.
Social coordination is a process of continuing mutual adjustment.
Example: Freeway – smoothly coordinated Flow
Drivers will disperse themselves evenly over the lanes.
Why?
Drivers move out of any lanes that are moving slowly and
into those that are moving faster. This speeds up the slow
lanes and slows down the fast lanes until all lanes are
moving at the same rate.
It all happens quickly, continuously, and far more effectively
than if someone at the entrances passed out tickets
assigning each vehicle to a particular lane.
Like the number of people in a lane, profits and loss provide market
participants with information about the advantages and disadvantages of
different economic activities.
19. Milton Friedman: The Pencil
Milton Friedman (Nobel Price 1976) uses a pencil to illustrate how the free
market price system promotes cooperation and harmony among those with no
common interest.
20. Division of Labor
20
Our market economy is the social system of the division of labor under private
ownership of the means of production – with coordination through money prices.
Supply, demand and prices in input and output markets determine the allocation
of resources and the ultimate combinations of things produced.
22. Rules of the Game
Whether the “game” is business, government, science, family, school,
traffic, it can’t be played satisfactorily unless the players know at least
roughly what the rules are and generally agree to follow them.
If rules are absent or suddenly upset, social co-operation can fall apart
quickly. People do not know exactly what is expected of them or what
they can expect from others.
23. Rules of the Game: Property Rights
Property Rights are a major part of the „rules of the game“
which govern economic activity.
A market exchange economy is based on private property
rights (legal ownership) that can be voluntarily traded or
exchanged.
Private property rights involve:
• the right to exclusive use.
• legal protection against invaders.
• the right to transfer to another.
24. ECONOMIC SYSTEMS
Traditional Command Market Mixed
Shaped by tradition
Long-established
patterns
Not very dynamic
Centralized
Planning
State decides how
to use and
distribute resources
Government
regulates prices
and wages
Decentralized
interactions
between buyers
and sellers are
used to allocate
resources
Many economic
decisions are made
in the market by
individuals
Government also
plays a role in the
allocation and
distribution of
resources
26. Crusoe recognizes that there are scarce items that can help him to directly achieve his goals. For example,
the running water in the stream can directly quench his thirst, and the coconuts can directly satisfy Crusoe’s
hunger. Economists call these consumer goods.
On the other hand, there are items that are certainly useful, and which would allow Crusoe to achieve more of his
goals if he had more such items— hence they are goods—but they are not directly useful to him. They are only
indirectly useful because they help Crusoe to obtain more consumer goods. Economists call such items producer
goods or factors of production or means of production.
For example, a long stick, in and of itself, doesn’t do anything for
Crusoe, and if it were the only object on the island, Crusoe would not
consider it a good at all. But because there are coconuts hanging on
trees—some of
which are out of Crusoe’s reach—suddenly the stick acquires value
indirectly. Crusoe now considers the stick to be a good, even though it
doesn’t directly satisfy hunger, because it indirectly helps him to
achieve his goal.
Consumer Goods vs. Producer Goods
27. Land, Labor, and Capital Goods
Land: all the natural resources of the Earth which can be
used in production (flowing stream, trees…)
Labor: all the human effort, mental and physical, which is
used in production
Capital Goods: are those factors of production that were
created by people (fishing net, shelter…) and enhance our
ability to produce output in the future. Capital refers to
anything that is not used for its own sake but which makes
a contribution to production.
28. Income, Saving and Investment
• Factor TIME
• Income: The flow of consumer goods and services that a person has the
potential to enjoy during a specific period of time.
• Saving: Consuming less than one’s income would allow; living below
one’s means.
• Investment: Diverting resources into projects that are expected to
increase future income.
One of the most important decisions a person makes is whether to devote time and other
resources to the present or to the future. Through saving and investment, people
sacrifice current enjoyments but achieve much greater enjoyments in the future.
29. EXAMPLE:
From hand-to-mouth existence to increased productivity
Suppose that with his bare hands, Crusoe can knock down 20 apples per day.
Fortunately, eating 20 apples per day provides enough nourishment to maintain
Crusoe in decent health. But Crusoe knows that if he should ever become sick
or injured, he could easily die because of the vulnerability of his hand-to-mouth
existence.
Therefore, Crusoe begins saving 10% of his income every day. In other words,
Crusoe continues to work all day, day in and day out, gathering (earning) 20
apples per day. But he only eats (consumes) 19 apples each day, and sets
aside (saves) 1 apple out of each day’s income.
After living below his means in this fashion for 20 days, Crusoe has
accumulated a stockpile of 20 apples. Crusoe can now either simply enjoy a
free day and consume his saved apples or invest his gained free time in a long
range venture, which he expects will permanently increase his future
productive capacity, for example building a LADDER (=capital good).
By consuming less than his daily income - by living below his means - Crusoe
saved apples in order to build up a fund to guard against sudden disruptions in
his future income. Moreover, Crusoe then invested his resources into the
creation of a capital good that greatly augmented his labor productivity.
(Based on: Robert Murphy: Lessons for the Young Economist)
30. Opportunity Cost
Economists don’t ask:
“How much do I have to pay for it?”
but
“What do I need to give up to get it?”
•The cost of something is what you give up to get it.
•The highest valued activity sacrificed in making a choice.
•Opportunity costs are incurred when a choice is made.
•They are subjective and vary across persons.
•If an option becomes more costly, an individual will be
less likely to choose it.
31. Opportunity Cost: EXAMPLE
• All choices involve costs.
• Consider the costs of going to college.
• The opportunity cost of going to college includes:
• Monetary cost: tuition, books.
• Non-monetary cost: forgone earnings.
• If the opportunity cost of college rises (e.g. tuition
rises or you get a fantastic job offer) then one will
be less likely to attend college.
32. Why study Economics?
• Making sense of the world
• Understanding global economic developments
• Evaluating proposals for changes in economic policies
• Different way of thinking
• Improving your decision-making skills
• Encourages skepticism and critical analysis
• Solid skills base
33. Recommended Literature
• The Economic Way of Thinking; Heyne/Boettke/Prychitko; 12th ed.
Prentice Hall – Chapter 1
• Economics in One Lesson, Henry Hazlitt
(www.fee.org/library/books/economics-in-one-lesson)
• Economic Logic; Mark Skousen; Capital Press
• Understanding Economics; Stroup, Sobel, Gwartney and
Macpherson; Cengage
37. YOUR COUPON
Save 20% on your next order:
Use promo code LqhWqP at the checkout
WWW.CEE-PORTAL.AT
Notes de l'éditeur
Check AUDIO
Good semester break
Next couple of weeks
Providing some context to ongoing debates and political decisions/ get acquainted with major ideas
Course Overview - Topics
Expectations?
Benotung
Literature (just Lecture Notes)
Presentation (10-15 Min MAX)
Presentation Sign-Up Sheet (Clear Handwriting)
Presentation Skills Sheet
START
WHAT ARE THE DIFFERENT SYSTEMS?WHAT SHOULD THEY ACHIEVE?
WHAT MAKES A GOOD ECONOMIC SYSTEM?WHAT SYSTEM ARE WE LIVING IN?
Question: What is Economics all about
A lot of people have misconceptions about Economics
Money, investment, stock markets, balance sheets, profits, interest rates, inflation
It´s all about people and why they behave the way they do - we will see why
Two facts are true for everyone regardless of gender, age, income…: The first is Unlimited Wants Not negative…(Each of you can think of something that would make him more happy.. QUESTION…and if you get it you could still think of something else...only perfect beings want nothing)
Self-interested behavior is not the same as selfish behavior
What´s the problem with having unlimited wants? Well, everyone also has limited resources, which means there is no possible way to satisfy all those things we´d like to have. SLIDE Maybe you don´t have enough time to do everything you´d like or you don´t have enough energy, or not enough money to acquire those things you would like.
Example: Bill Gates Hawaii, Tahiti
So one thing is certain, SLIDE with unlimited wants and limited resources choices must be made. And that´s it really, to put it simply – economics studies choices.
Economics is the study of choice under scarcity. From that simple definition, economics branches into fascinating fields of inquiry touching most aspects of human and social behavior.
By definition, economics is the study of how people choose to use their scarce resources in an attempt to satisfy their unlimited wants.
Well what does this mean exactly? As I read through the definition, the first unfamiliar term that I see is the word SCARCE. What is scarcity?
Scarcity is the fundamental challenge confronting all individuals and nations. We all face limitations... so we all have to make choices. We can't always get what we want.
Goods are scarce when they are insufficient in quantity relative to the demand for them
Scarcity exists when there is not enough of something (product/service/resource) to satisfy everyone´s wants, at a ZERO PRICE.
This last part is important – it tells us that if I try to provide the product for free there won´t be enough to go around.
How we deal with these limitations - So how do we decide who gets the product? Well, one way is to start charging money.
Ueberleitung:
At the individual level we face choices about how to allocate our time, money and other resources. We face similar choices at the societal and global levels, because there are millions of alternative uses for the land, labor, capital resources of a society.
Economists generally recognize four basic types of economic systems—traditional, command, market, and mixed—but they don’t completely agree on the question of which system best addresses the challenge of scarcity.
If something has a price tag, it is a good indicator that it is scarce…
Criticism?
Example: Old lady fees milk to cat while children are starving
(In theory you should have earned that money by serving other people)
Discussion:
What is Fairness/Justice? Slippery term…
Die Abhaengigkeit vom Markt kann zu Ungerechtigkeiten fuehren, aber die Abhaengigkeit von einem zentralen Machtkoerper ist noch gefaerhlicherBsp: Pizza divided into equal pieces? Vs. Those who pay most (most hungry) get biggest piece
Consumers “vote” with their money how the resources should be allocated. The most profitable businesses are those that make most consumers happy.
Why no pyramids?
Why no buses made of gold?
Highly unprofitable – Profit indicates where the resources should go.
Question: Do you know how ration coupons work?
other ways to ration:
‘first come, first served’
lottery
equal shares for all
‘might makes right’
merit
Discussion: Advantages/Disadvantages of each system. In which situations can an alternative system be better than the price system?
SOCCER WORLD CUP EXAMPLE? (Zuteilung…)
To illustrate how the price system works let’s look at the supply of a big city.
VLC Media Player – MEDIA – OTEVRIT DISK
The Grid 2: 48:53 – 53:50
53:51 – 59:12
59:13 - 1:02:50
1982 Francis Ford Coppola, George Lucas: beschaeftigt sich zivilisationskritisch mit der menschlichen Lebensweise
Title means „Life out of Balance“
Question to Students: Who coordinates?
Supply of a city – Example Supermarket: NOT TOO MUCH, NOT TOO LITTLE – Question to students WHO COORDINATES?
Big part of the course will consist in showing how markets work
We rarely notice the existence of order in society and cannot recognize the process of social coordination upon which we depend every day.
(Es fehlt am urspruenglichen, spontanen Fragen)
rather than anarchy and chaos - smoothly coordinated flow. Urban traffic is an example of social coordination – we will see in a moment how it works
First we have to recognize that there is an order that needs explanation
Is cooperation/PEACE/civilization something natural?
Hobbes was an English philosopher. His 1651 book Leviathan established the foundation for most of Western political philosophy from the perspective of social contract theory. Hobbes wrote that civil war and situations identified with a state of nature and the famous motto Bellum omnium contra omnes ("the war of all against all") could only be averted by strong central government.
Der Mensch ist nicht von Haus aus ein Gemenschaftswesen
Explain term SOCIAL CONTRACT in simple terms
The social contract theory holds that in earliest history man lived in a "state of nature." No government existed. Each man was only as secure as his own power and mental awareness could make him. By agreeing with one another to make a state by contract, men within a given area joined together, each surrendering personal freedom as necessary to promote the safety and well being of all. By this contract the members created a government. The social contract gives rights and responsibilities to both the citizenry and the government.
For example, in The United States, citizens yield the powers of prosecution of, and punishment for, criminal offenses to the judicial branch of government. The government, for its part, bears the responsibilities of maintaining public safety for the citizens through the police, court systems, correctional facilities, and all supporting structures.
Example: Traffic Light
Social Contract – CONSTITUTION
Examples where we trade LIBERTY for SECURITY: Speed Limits, Passenger and Luggage Screening at Airports
Discussion:
How far should it go? Smoking, EU regulations…
From Wendy A. Stock (Introduction to Economics, Chapter 8)
John Stuart Mill “On Liberty”
Uebergang von Social Contract Theory: Frueher glaubte man man muss einfach bessere Gesetze machen…aber es gibt oekonomische Gesetze, die sich automatisch einhalten – dies “entdeckte” Adam Smith.
1776 – “father of economics” – famousĺy called it the „Invisible Hand“
Smith is saying that participants in the economy are motivated by self-interest and that the “invisible hand” of the marketplace guides this self-interest into promoting general economic well-being. (MANKIW)
Scotish Philosopher - 100 years ago there was no subject “Economics” (rather Law, Philosophy)
Distribute Poster – History of Economic Thought
Prague Exhibition “Money” – Original of Wealth of Nations on Display
Even if you as a person are very nice and want to cooperate with others – how
Beispiel: Koordinierungsproblem im Sozialismus (Praesentation) – an den Beduerfnissen vorbeiproduzieren
Other Example: Supermarket Checkout – no tickets assigned
Think of HIGH PRICE as a crowded lane, LOW price as a fast lane.
These are examples how social cooperation emerges when people act under generally accepted rules (only overtake on the left side, stick to speed limit…)
Example: Today nobody told you where to sit
In a typical college classroom without a seating chart, dozens of students nevertheless occupy classroom seats with a minimum of confusion and disorder. Economics explains the orderly process of seat selection by assuming students follow a simple, perhaps even unwritten rule, such as „seats belong to the person who first occupies them“
Mention: Importance of Rules (Tradition, Religion) – one presentation will cover this.
Rules could be different: Oldest or youngest, women sit in front etc…
Todays seats are not scarce, if they were we would have to find some allocation mechanism
1976 Nobel Price: Print out Economics Nobel Price Paper for students
Friedman is using a very simple example, in this case a #2 pencil, to demonstrate how amazing the working of the "invisible hand" of the free market is.
http://www.youtube.com/watch?v=R5Gppi-O3a8
Arbeitsteilung: Heyne: Einzelner wuerde nicht lange ueberleben
We move in this scheme like drivers between highway lanes.
Ziel ist es den Preismechanismus funktionsfaehig zu machen.
Examples of Perfect Competition:
How to recognize a perfectly competitive industry?
Kriterien fuer “perfekten Markt” – alle Anbieter und Nachfrager kennen gleichzeitig ihre Angebote
INTERNET – Consumer is KING
Large number of sellers and buyers (no individual is large enough to affect the market)
Examples: Financial markets – stock exchange, currency markets
Easy entry and exit
Monopolistic Competition:
Each firm may have a tiny ‘monopoly’ because of the differentiation of their product
Firm has some control over priceExamples – restaurants, magazines, professions: Lawyers, plumbers, etc.
Oligopoly:
Market or industry is dominated by a small number of sellers. (Cartel)Examples: Banking industry, Chemicals, Oil, Medicinal drugs / Pharma, Telecommunication, Automobile IndustryCartel = an agreement among competitors to regulate prices or output
The best known example of a cartel is probably the Organization of Petroleum Exporting Countries (OPEC).
Monoply: “single seller” (= original meaning),
Question to students: Why is monopoly bad?
Since monopolies are the only provider, they can set pretty much any price they choose, regardless of demand, because they know the consumer has no choice. They can also supply inferior products. They are also bad for an economy because the manufacturer has no incentive to innovate, and provide "new and improved" products.
Question: Why is it important to have rules?
Examples:
Countries in Transition
Travelling abroad
Discussion: Religion plays a big role in shaping the Moral Code (10 Commandments vs other Religions – something similar?)
Buddhism has it's Eight Fold Path, while not exactly commandments, are suggestions for living.
Five Pillars of Islam
Four aims of Hinduism
Take one students item and explain that the protection of private property is legally enforced
Private Property can be transferred, sold, or mortgaged
Free-market capitalism: role of the state is limited to protecting property rights.
Why is private ownership important? Does a 60 year old tree farmer have an incentive to plant and care for trees that will not reach optimal cutting size for 50 years? Explain.
Private ownership links responsibility with the right of control.
Private ownership is a key to prosperity as it provides people with a strong incentive to take care of things and develop resources in ways that are valued by others.
In contrast, commonly owned property will be poorly maintained and over-utilized rather than conserved for future use.
Summary: There's more than one way for a society to organize its economy. There are many types of economic systems but there are 4 Basic CLASSES
Maybe everyone simply follows tradition, following pretty much the same economic pursuits as their parents and grandparents before them. Or maybe the government decides what's best. Or perhaps the government stays out of it, leaving the economic system to be determined by the combined decisions of millions of individual people.
A traditional economic system is—here's a shocker—shaped by tradition. The work that people do, the goods and services they provide, how they use and exchange resources… all tend to follow long-established patterns. These economic systems are not very dynamic—things don’t change very much. Standards of living are static; individuals don’t enjoy much financial or occupational mobility. But economic behaviors and relationships are predictable. You know what you are supposed to do, who you trade with, and what to expect from others.
In many traditional economies, community interests take precedence over the individual. Individuals may be expected to combine their efforts and share equally in the proceeds of their labor. In other traditional economies, some sort of private property is respected, but it is restrained by a strong set of obligations that individuals owe to their community.
Today you can find traditional economic systems at work among Australian aborigines and some isolated tribes in the Amazon. In the past, they could be found everywhere—in the feudal agrarian villages of medieval Europe, for example.
In a command economic system or planned economy, the government controls the economy. The state decides how to use and distribute resources. The government regulates prices and wages; it may even determine what sorts of work individuals do. Socialism is a type of command economic system. Historically, the government has assumed varying degrees of control over the economy in socialist countries. In some, only major industries have been subjected to government management; in others, the government has exercised far more extensive control over the economy.
The classic (failed) example of a command economy was the communist Soviet Union. The collapse of the communist bloc in the late 1980s led to the demise of many command economies around the world; Cuba continues to hold on to its planned economy even today.
In market economies, economic decisions are made by individuals. The unfettered interaction of individuals and companies in the marketplace determines how resources are allocated and goods are distributed. Individuals choose how to invest their personal resources—what training to pursue, what jobs to take, what goods or services to produce. And individuals decide what to consume. Within a pure market economy the government is entirely absent from economic affairs.
The United States in the late nineteenth century, at the height of the lassez-faire era, was about as close as we've seen to a pure market economy in modern practice.
A mixed economic system combines elements of the market and command economy. Many economic decisions are made in the market by individuals. But the government also plays a role in the allocation and distribution of resources.
The United States today, like most advanced nations, is a mixed economy. The eternal question for mixed economies is just what the right mix between the public and private sectors of the economy should be.
Tom Hanks “Castaway” 2000, Leonardo di Caprio “The Beach” – gute Szene wo alle sagen was sie aus der Stadt haben wollen….
Have you seen it? Did you like it? What did you think about it? Interesting from an economic point of view (famous scene when they go to town…)
Robinson Crusoe faces the most elementary human problem, how to survive
Difference between consumer goods and producer goods
Bsp: “Ding der Woche” Buchseitenhalter , auch als Verkaeufer muss man den Leuten die Nuetzlichkeit, Verwendbarkeit von gewissen Dingen erklaeren,um Ihnen Wert zu geben.
These are different types of producer goods
What are Capital Goods (Question for Students…all Tools…etc…..Hammer…imagine world without tools)
CAPITAL refers to anything that is not used for its own sake but which makes a contribution to production. (MANKIW)
Insert IMAGES (Shelter, Fishing Net)
Reading: Chapter 1 and 2 of „How an Economy grows and why it crashes“
Story Apples/Ladder:
Example SAVING: Robinson Crusoe konsumiert jeden Tag 20 Äpfel, für deren Produktion, d.h. Pflücken, er den gesamten Arbeits-2 tag verwenden muß. Aufgrund seiner unendlich hohen Zeitpräferenzrate vermag er es nicht, Ersparnisse aufzubauen, d.h. er verspeist jeden Tag alle 20 Äpfel. Mit der Zeitpräferenzrate beschreiben wir das universelle Phänomen, daß Menschen den Konsum eines heutigen Gutes dem Konsum ein und desselben Gutes zu einem späteren Zeitpunkt vorziehen. Je höher die Zeitpräferenzrate, desto mehr Wert wird heutigem Konsum beigemessen. Anders formuliert, je höher die Zeitpräferenzrate, desto reichlicher muß die Kompensation für den Verzicht auf heutigen Konsum ausfallen.
Es ist klar ersichtlich, daß Robinson Crusoe ohne Veränderung seines Konsumverhaltens seine materielle Position nicht verbessern kann, da er den gesamten Tag arbeiten muß, um den, seinen Konsumwünschen entsprechenden, Arbeitsaufwand unterbringen zu können. In dem Augenblick jedoch, in dem er sein Konsumniveau hinunterschraubt, also zu sparen beginnt, setzt der Aufbau eines Kapitalstocks ein. Nehmen wir an, daß RC anstatt 20 Äpfel nur mehr 19 verspeist und 1 aufbewahrt (wir nehmen der Einfachheit halber weiters an, daß die Äpfel nicht verderben).
Eine derartige Veränderung des Konsumverhaltens spiegelt eine Veränderung der Zeitpräferenzrate wieder, denn heutiger Konsum wurde relativ zu morgigem unwichtiger.
Der Vorgang des Konsumverzichts von 1 Apfel wiederholt sich insgesamt 19 Mal. Am Ende dieses Zeitraums hat er eine Tagesration an Äpfeln aufgespart. Diese kann er am 20. Tag entweder verkonsumieren, d.h. Freizeit genießen, oder er investiert diesen Tag in die Erforschung alternativer Arbeitsmethoden (Leiter...)`
Discussion:
“We are standing on the shoulders of giants”
http://mises.org/books/lessons_for_the_young_economist_murphy.pdf
You cannot make a lot of sense of what goes on in the world without some knowledge of basic economics.
"Economics is about the world around us; it’s current; it’s about the modern world; it’s about how we behave, how businesses behave and how the government behaves."
"It is an excellent degree and provides you with a solid skills base. The ability to question things in the way that economics forces you to, and look for underlying causes/incentives, is very useful in the work place."
"Go for it! Economics is about a different way of thinking and looking at the world. You can apply the economic way of thinking to almost everything, not just to business or finance and such."
International Economics combines the excitement of world events and the incisiveness of economic analysis.
Students are encouraged to follow current economic and political events
Approaching controversial issues with objectivity and clarity. People expressing their views on such issues as immigration, international trade, illegal drugs or politics often cite subjective opinions rather than facts. Economics provides a tool for viewing controversial issues objectively.
