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Modern Principles Microeconomics and Macroeconomics

See the Invisible Hand Understand Your World. Modern Principles Microeconomics and Macroeconomics . Tyler Cowen and Alex Tabarrok. The Romance. Roses in February in Chicago. Quite incredible. Where do the Roses come from? Not from nearby greenhouses!.

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Modern Principles Microeconomics and Macroeconomics

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  1. See the Invisible HandUnderstand Your World Modern PrinciplesMicroeconomics and Macroeconomics Tyler Cowen and Alex Tabarrok

  2. The Romance • Roses in February in Chicago. Quite incredible. Where do the Roses come from? Not from nearby greenhouses!

  3. Bloemenveiling photo by Wilfried Overwater.

  4. Markets are Cooperative • A rose is a truly international product. • The market for roses links romantic Americans with South American flower growers, Dutch clocks, Finnish cell phones, Colombian coffee (to keep the pilots awake) and much more. • Hundreds of thousands of people from Ecuador to Chicago cooperated to bring the rose to our handsome young man and they did so voluntarily, on the basis of self interest, and without central direction - this is the invisible hand in action.

  5. The True Importance of the P=MC Condition of Profit Maximization

  6. How to Minimize the Total Costs of Corn Production Across Two Farms Farm Two Farm One MC1 $ $ MC2 $200th unit A C Savings C = A-B Cost of Producing 200th Unit B 25 0 175 200 Quantity (Bushels of Corn) Quantity (Bushels of Corn) Decrease in Costs Increase in Costs

  7. To Minimize Total Costs Set MC1=MC2 MC1 $ $ Farm Two Farm One MC2 160 40 0 Quantity (Bushels of Corn) Quantity (Bushels of Corn)

  8. A Much More Difficult Problem Pat Sets P=MC1 , Alex sets P=MC2 as a result MC1=MC2 Alex’s Farm Pat’s Farm MC1 $ $ MC2 Price of Corn $2.50 40 160 0 Quantity (Bushels of Corn) Quantity (Bushels of Corn)

  9. Pat Sets P=MC1 , Alex sets P=MC2 as a result MC1=MC2 MC1 $ $ Alex’s Farm Pat’s Farm MC2 Price of Corn 160 40 0 Quantity (Bushels of Corn) Quantity (Bushels of Corn)

  10. Pat Sets P=MC1 , Alex sets P=MC2 as a result MC1=MC2 MC1 $ $ Alex’s Farm Pat’s Farm MC2 Price of Corn 160 40 0 Quantity (Bushels of Corn) Quantity (Bushels of Corn)

  11. Pat Sets P=MC1 , Alex sets P=MC2 as a result MC1=MC2 MC1 $ $ Alex’s Farm Pat’s Farm MC2 Price of Corn 160 40 0 Quantity (Bushels of Corn) Quantity (Bushels of Corn)

  12. The True Importance of the P=MCCondition is P=MC1=MC2 …=MCN MC1 $ $ Alex’s Farm Pat’s Farm MC2 Price of Corn $2.50 160 40 0 Quantity (Bushels of Corn) Quantity (Bushels of Corn)

  13. Teaching Resources • Videos, Powerpoints, experiments, and blog posts that are especially relevant to teaching principles of economics are collected at SeeTheInvisibleHandResourceBank.com • Keyed to Modern Principles but relevant for all principles of economics teaching. • You can also find Modern Principles on Facebook. http://www.facebook.com/ModernPrinciples • Like the page and you will get a few posts a week with useful material keyed to typical class progression.

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