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| | Several of our students in this class are starting a new homeschooling publication, which will soon be announced on ''Conservapedia.com'' and available online. A student who took this class in 2007 and who is now excelling in college is publishing this observation: | | Several of our students in this class are starting a new homeschooling publication, which will soon be announced on ''Conservapedia.com'' and available online. A student who took this class in 2007 and who is now excelling in college is publishing this observation: |
| − | {{cquote|My microeconomics class has been almost all review for me, because of the similar class I took from Mr. Andy Schlafly .... Although other students who attended public schools may have taken “economics” before, they have struggled with microeconomics this semester, because their high school classes completely ignored the free-market and Austrian economics which are taught [in college].}} | + | {{cquote|My microeconomics class has been almost all review for me, because of the similar class I took from Mr. Andy Schlafly .... Although other students who attended public schools may have taken “economics” before, they have struggled with microeconomics this semester, because their high school classes completely ignored the free-market and Austrian economics<ref>"Austrian economics" is an approach to economics that emphasizes the free markets, minimizing governmental interference, respecting private property rights, and promoting gold as a monetary standard. Austrian economics can be more libertarian than conservative on social issues, however, and it has been slow in incorporating new economic insights such as the Coase theorem.</ref> which are taught [in college].}} |
| | Let's begin this lecture by summarizing the percentages the CLEP exam devoted to particular topics. This will be immensely helpful to our students who will be taking the CLEP exam, and will also assist everyone else by facilitating their organization of the material covered in this course. Our final exam next class will use a similar distribution in topics as the CLEP exam, but without over-emphasizing government policy as the CLEP exam does. Instead of so many government questions, we will substitute in some of the additional topics we covered in this course. | | Let's begin this lecture by summarizing the percentages the CLEP exam devoted to particular topics. This will be immensely helpful to our students who will be taking the CLEP exam, and will also assist everyone else by facilitating their organization of the material covered in this course. Our final exam next class will use a similar distribution in topics as the CLEP exam, but without over-emphasizing government policy as the CLEP exam does. Instead of so many government questions, we will substitute in some of the additional topics we covered in this course. |
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| | |Inputs to a Firm (espec. labor) || 10% || key here is applying logic and other concepts to reason back from product demand to a firm's need for labor (workers); know effects of minimum wage; might also be asked about capital | | |Inputs to a Firm (espec. labor) || 10% || key here is applying logic and other concepts to reason back from product demand to a firm's need for labor (workers); know effects of minimum wage; might also be asked about capital |
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| − | |Perfect Competition || 6% || costs and profits and price are lowest for this market ; shut down short run when P<AVC; shut down long run when P<ATC | + | |Perfect Competition || 6% || costs and profits and price are lowest for this market : P=MC=ATC and "economic profits" are squeezed to zero. If price falls, shut down short run when P<AVC; shut down long run when P<ATC . |
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| | |Monopolistic Competition || 6% || can set its price above MC, but low barrier to entry prevent long run profits and require P=ATC | | |Monopolistic Competition || 6% || can set its price above MC, but low barrier to entry prevent long run profits and require P=ATC |
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| | |Price Elasticity || 5% || measures how demand responds to price changes; "elastic" means big change in demand for small change in price of good | | |Price Elasticity || 5% || measures how demand responds to price changes; "elastic" means big change in demand for small change in price of good |
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| − | |Monopolies || 4% || the firm sets its price above marginal cost, but not higher than where MR=MC | + | |Monopolies || 4% || the firm sets its price above marginal cost, but not higher than where MR=MC; economic profits are greater than zero; economic rent exists. P>MC. P>ATC. |
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| | |Demand Curve || 4% || what the public will pay; all firms in all kinds of markets are restrained by the Law of Demand | | |Demand Curve || 4% || what the public will pay; all firms in all kinds of markets are restrained by the Law of Demand |
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| | Remember that on these exams you don’t have to be correct every time. Batters who achieve hits only one-third of the time are elected to the Baseball Hall of Fame. You want to strive to do a bit better on these exams, but you don’t have be successful on every single question. You simply want to maximize your average. | | Remember that on these exams you don’t have to be correct every time. Batters who achieve hits only one-third of the time are elected to the Baseball Hall of Fame. You want to strive to do a bit better on these exams, but you don’t have be successful on every single question. You simply want to maximize your average. |
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| − | ==Final Odds and Ends==
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| − | At the beginning of this lecture, there was a quote by a student who took this course in 2007. She referred to "Austrian economics." What is that?
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| − | Austrian economics is <define>.
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| − | Former MIT Professor Paul Samuelson, one of the best-known American economists, passed away on Sunday. He authored the most widely used college textbook on Economics, which focuses more on Macroeconomics (the big picture) than on Microeconomics (individual firms and markets, and the basis of our course). Samuelson was a disciple of the liberal economist John Maynard Keynes discussed in our Lecture Thirteen, but Samuelson did permit some conservative concepts to be included in his textbook and supported tax cuts during the Kennedy Administration in the early 1960s.Normal profit:
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| − | The term “normal profit” means “zero economic profits,” which occurs when total revenue equals explicit costs (like cash expenditures) plus implicit costs (like opportunity costs of wasted time). In Figure B (attached), at point A, what kind of profits does the company have: (a) more than a “normal profit”, (b) equal to a “normal profit” or (c) less than a “normal profit.”?
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| − | Like many fields, it is often helpful for the student to find something easy to understand and then relate difficult ideas to that concept. Which concept are you most comfortable with? Perfect competition? Elasticity? MR=MC? Monopolies? In perfect competition, economic profits are squeezed to zero. P=MC. P=ATC. From there, you can understand monopolies better. A monopoly must be something other than perfect competition. Economic profits are greater than zero; economic rent exists. P>MC. P>ATC. But in both competition and monopolies, MR=MC.
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| | == Final Comments == | | == Final Comments == |