1. Introduction and Supply & Demand
microeconomics will have a distinct sort of policy angle to it. he says the longer
he speaks without interruption, the faster. I speak, until I spin off. the other point
of my teaching style is I talk way too fast, Gruber says. Microeconomics is the
study of how individuals and firms make decisions in a world of scarcity.. he says
the course is about tradeoffs, how do you trade off things to make yourself as
well off as possible. will this cover irrationality. I will sprinkle it throughout but
not as much as I actually believe in it. everything you do has a next best
alternative you could have done. Instead.. economics is referred to as the
"doomish science" by Paul Samuelson.. mit is the perfect place to be teaching
economics. Because engineering is all about constrained optimization.
Constrained optimization. the same principles you could think of for your
engineering classes, but applied to people's lives..
What we 'll learn today was developed at mit, so it 's a great place to be learning
it. we 're going to proceed by teaching very simplified models. we want to write
down in our models a set of simplifying assumptions that allow us, with a
relatively small set of steps, to capture relatively broad phenomena. with a fairly
simple set of models, we will be able to offer insights and explain a whole huge
variety of phenomena... Adam Smith is considered the father of economics. his
1776 book The Wealth of Nations laid out the entire core of the economics field.
Adam Smith's. Most famous example was the water diamond paradox. he said,
think about water and diamonds. yet for most of us, water 's free and diamonds
are super expensive. how can this be. Adam Smith asked. in the market for
roses,. In the market for roses, we have a demand curve and a supply curve.
basically, as the price of roses goes up., people want fewer of them. we are
going to dive into where this demand curve comes from. we'll go to first
principles and build it back up. as the price goes up, firms want to produce more
of the roses..
where the points meet is the market Equilibrium. that is the point where both
consumers and producers are happy to make a transaction. consumers are
happy because on their demand curve is the $ 3 and 600 roses.. producers are
willing to supply 600 roses at $ 3. that's the one point where consumers are
happy and producers happy. there are people out there who need a kidney. I 'm
putting my kidney on ebay for auction. bidding went nuts. it started at $ 25,000.
it climbed to $ 5 million. Before the auction was shut down.. ebay decided they
would n't allow you to sell your body on ebay. on ebay, there's no way to
regulate it or you do n't necessarily know. people might not be able to tell if
they're getting a legit kidney or not. people could be like selling fake kidneys, per
microeconomics will have a distinct sort of policy angle to it. he says the longer
he speaks without interruption, the faster. I speak, until I spin off. the other point
of my teaching style is I talk way too fast, Gruber says. Microeconomics is the
study of how individuals and firms make decisions in a world of scarcity.. he says
the course is about tradeoffs, how do you trade off things to make yourself as
well off as possible. will this cover irrationality. I will sprinkle it throughout but
not as much as I actually believe in it. everything you do has a next best
alternative you could have done. Instead.. economics is referred to as the
"doomish science" by Paul Samuelson.. mit is the perfect place to be teaching
economics. Because engineering is all about constrained optimization.
Constrained optimization. the same principles you could think of for your
engineering classes, but applied to people's lives..
What we 'll learn today was developed at mit, so it 's a great place to be learning
it. we 're going to proceed by teaching very simplified models. we want to write
down in our models a set of simplifying assumptions that allow us, with a
relatively small set of steps, to capture relatively broad phenomena. with a fairly
simple set of models, we will be able to offer insights and explain a whole huge
variety of phenomena... Adam Smith is considered the father of economics. his
1776 book The Wealth of Nations laid out the entire core of the economics field.
Adam Smith's. Most famous example was the water diamond paradox. he said,
think about water and diamonds. yet for most of us, water 's free and diamonds
are super expensive. how can this be. Adam Smith asked. in the market for
roses,. In the market for roses, we have a demand curve and a supply curve.
basically, as the price of roses goes up., people want fewer of them. we are
going to dive into where this demand curve comes from. we'll go to first
principles and build it back up. as the price goes up, firms want to produce more
of the roses..
where the points meet is the market Equilibrium. that is the point where both
consumers and producers are happy to make a transaction. consumers are
happy because on their demand curve is the $ 3 and 600 roses.. producers are
willing to supply 600 roses at $ 3. that's the one point where consumers are
happy and producers happy. there are people out there who need a kidney. I 'm
putting my kidney on ebay for auction. bidding went nuts. it started at $ 25,000.
it climbed to $ 5 million. Before the auction was shut down.. ebay decided they
would n't allow you to sell your body on ebay. on ebay, there's no way to
regulate it or you do n't necessarily know. people might not be able to tell if
they're getting a legit kidney or not. people could be like selling fake kidneys, per
