Henry Haziest: Economics in One Lesson 0 Peter Shift: How an Economy Grows and Why It Crashes HTTPS://casebooks. Vs.. CZ 0 Password: ekes My lectures Introduction to the economic way of thinking how economists think Structure of human action Means Ends Structure of our lectures Economic principles 0 Two ideal types of human society 1 . Organized economy 2. Property rights economy Real economy (mixed) Science
Natural science Social science Natural-science and economic view of humans Past Present Cause Behavior Circumstances Action Goals Circumstances + Goals = Incentives ?+ Action First economic axiom People act. Consequences of action Intended vs.. Unintended 0 Economics searches for both! Second economic axiom People live in the world of scarcity. Definition Economics is the science of how people act in the world where there is scarcity. 0 Economics is the science of how people economize. Basic terms Good = something by means of which I can and intend to attain my goals. Free good: is abundant with respect to my goals. 0 Economic good: is scarce with respect to my goals. 0 Total utility = degree of fulfillment of my goals. 0 Marginal utility = contribution to the fulfillment of my goals. Expected marginal utility = expected contribution to the fulfillment of my goals.
My opportunity costs were: 0 bigger than the expected utility of studying sociology 0 bigger than the expected utility of studying philology 0 bigger than the expected utility of studying economics 0 bigger than the real utility of studying economics smaller than the real utility of studying economics Principles of human cacao Real action We choose only time to time. 0 Most of the time, we mechanically execute our past choices. 0 This execution has a nature of a rule, often a simple one. 0 Reoccurring of a choice is caused by a nudge. 0 Nudge is an event, not an action. It isn’t under our full control. Time Time preference 0 Rate of time preference 0 Marginal rate of time preference