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Introduction to Micro-economics Technote

Introduction to Micro-economics Technote. Creating a distribution; calculating a probability. Social science needs to add parts (individuals, firms, etc.) to create a whole. Market demand (private goods) adds horizontally Adding and summarising a group is a basic tool for all research

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Introduction to Micro-economics Technote

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  1. Introduction to Micro-economicsTechnote Creating a distribution; calculating a probability

  2. Social science needs to add parts (individuals, firms, etc.) to create a whole • Market demand (private goods) adds horizontally • Adding and summarising a group is a basic tool for all research • We create a distribution of a group attribute (age) by counting members in categories • We can use a small sample to infer features of a population, provided the sample has important properties.

  3. MARKET DEMAND ADDS INDIVIDUAL DEMANDS Market demand curve

  4. Distribution of Class Ages • Compute your age according to the hand out • Plotting the age in groups generates a distribution. • The wider the categories, the higher the count in each category, but the cruder the distribution • The narrower the categories, the sparser the count for a give group size. • Key attributes of any distribution are the mean (average) and variance (spread). • The graph defines a histogram

  5. From distribution to probability • Define the area under the histogram/distribution as 1 • This allows one to answer questions such as • What is the probability that some one is more than 19 in this class? • What is the probability that someone has an age between 16.75 and 17.50 years

  6. Normal Distribution Small variance Large variance

  7. The square root of the variance is the standard deviation

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