intruction UNIGE

Introduction to Microeconomics Ch. 1 Introduction [ref.: MT 1] Prof. Frédéric Robert-Nicoud Fall 2013 General information All you need to know about the course, timetable, contact, exam, and even me but were afraid to ask -> cf. syllabus (please read thoroughly and carefully) You are free to choose o You may attend the course or not Freedom comes with duties o If you do attend the course, be punctual, switch off your mobile phones, avoid private conversations o But do interrupt me with questions and comments! Introduction to microeconomics 2013-2014 2 Chapter 1: Introduction 1. Approaching economics as a discipline Historical background Scarcity and choice 2. Key concepts and distinctions Micro v. macro Positive v. normative 3. Three principles of economics (or seven) 4. An even more compact look 4 Historical background o The slow emergence of economics Plato, Aristotle, Xenophon, and a long eclipse Chanakya (370-283BC) Qin Shi Huang (259-210BC) Renaissance, conquests, and Enlightenment o Thomas Aquinas (1225-1272) o Ibn Khaldun (1332-1406) 18th-19th centuries: the birth of a paradigm o 1776: Adam Smith's The wealth of Nation (production and absolute advantage) o Malthus (diminishing returns), Ricardo (distribution and comparative advantage), Marx (value) price supply Marshall (marginalism, supply and demand), and so on... demand 5 quantité Scarcity and choice (1) o Any individual or household faces many decisions: - who (in the household) will work? how much, how long? - how much should I invest in education & training? - how much should I spend on food, holidays, electronic gadgetry, etc.? o Likewise, producers (big & small) must make decisions: - what exactly should we produce, and how? In what amounts, and at what price? - Who should we hire? Where should we locate and invest? o Governments, too - How should we raise taxes? How much? How should we allocate our tax revenue? - How should we redistribute incomes, and to what extent? - Should we run budget deficits or balance the books? - Should we invest in education or purchase military fighters? 6 Scarcity and choice (2) o All these decisions are economic because we must decide how to use scarce resources (do we use resources to do this or to do that? because resources are scarce, we cannot do both). o The problem of scarcity is everywhere. - The main focus of economics is on production, consumption and exchange, hence a...