HW probelm #5 c, & d

c. The question asks you to find the equation for the PEP. It allows you to set Py to 1.
This is really just a trick of algebra.
Which variables should be present in the PEP? What variable is it attempting to show? You should figure out which variables are on the axis for the PEP, and solve for the variable it is showing in terms of these.
Any equation in terms of the variables on the axis which demonstrates the right relationship will be sufficient.
d. Apply the same process, but ask which variables are on the axis of the IEP graph, and which variable is being allowed to vary.

These were the two hardest parts of the set and were designed to see who could solve them. I will weight them accordingly.

See you in class tomorrow.

Reading Week 4

You've got the first HW assignment to finish by Wednesday this week. I will be posting the solutions Wednesday night online so you can study from them for the exam on the 7th of October. No late HW will therefore be accepted!!!
Reading:
1. Through Ch. 4 of Hirshleifer.
2. RSM The Formation and Function of Prices by Hans Sennholz.
3. Freedom's Theory of Value by Leonard Read (BBG #8) is a good review of the subjective theory of value. It's also a bit of a screed against Marxism...

See you Wednesday!

HW 1

You can download a copy of HW 1 here.

Reading Week 3

By Wednesday you should have read:
1. through Chapter 3 of the Hirshleifer text, and started Chapter 4. The test will cover all of Chapter 4 and everything up to it.
2. "To Drill or Not to Drill: Let the Environmentalists Decide" by Dwight Lee, originally printed in The Independent Review, Fall 2001.
3. Reading #'s 3, and 17 from the BBG Reader. The Broken Window by Henry Hazlitt is a crucial paper, and more than fair game for an extra credit question. Charging All the Traffic Will Bear is a classic demonstration of good economic writing by Leonard Read, who also wrote the I, Pencil essay you read.
4. Looking ahead, you will want to give The Formation and Function of Prices by Hans Sennholz a good reading or two. This essay is in both the RSM reader and the BBG reader (#61).

Comparative Advantage Game

Here is a link to the game I showed you at the beginning of class last week. Take your time and play through it a few times. Be sure to read the directions and explanations. Try the advanced game where you adjust the settings, too.

Reading Week 2

I'm sorry I did not post this sooner (though you have the syllabus).
For this week's class you should have:
1. Re-read Chapter 2, of the Hirshleifer text, and started Chapter 3.
2. Read R.A. Radford's The Economic Organization of a POW Camp. This is a very important reading!!!!
3. Reading #18 from the BBG reader is long and a little complex. You may want to read this a few times over the next several weeks, since it will make more sense each time.
4. The Puzzling Questions of Vital Concern... is the first chapter from Henry Grady Weaver's The Mainspring of Human Progress. This book was one of a small handful which motivated me to pursue Economics. It is recommended, but not required.
5. You may skip the BBG reading #14. I have just looked at it again and there's too much religious language.

Syllabus download in word

If you'd like to download a word doc of the syllabus click here.

Reading Week 1

Class, please remember the reading assignment.
1. Chapters 1 and 2 of the Hirshleifer and Hirshleifer text.
2. "I, Pencil" by Leonard Read from the Rustici, Snow, Milton anthology.
3. Readings 1, 3, 19, 49 from the Free Market Reader.
4. The syllabus also mentions "Wanted, An Unpractical Man" which was the basis for my presentation at the beginning of class. This is taken from chapter 2 of "What's Wrong With the World" by G.K. Chesterton, available at Gutenburg online for free.

Textbook Woes

I am paying attention to the textbook availability situation. Please keep me informed of new developments on this front.
I just came across another free online text which you may find helpful: R. Preston McAfee's Introduction to Economic Analysis. Available here.
Also, feel free to post links of things you find interesting or helpful to the comments of this blog.

Definitions

Economics:
Economics is the study of the principles governing the allocation of scarce means among competing ends when the object of the allocation is to maximize the attainment of those ends.

Scarce:
Things are scarce when human wants exceed the means to satisfy those wants.

Factors of production:
Labor:
All of man’s physical and mental talents that are used in the production of goods and services.

Wages:
Payment to labor, price of labor.

Land:
All natural resources.

Rent:
Payment to land.

Capital:
Man-made aids to production which enhances / increases production.

Interest:
Payment to capital.

Entrepreneurial Talent:
The resource that combines other factors of production in the capacity of a decision-maker, risk-taker, and innovator.

Profit:
Payment to entrepreneurial talent.

Economic Behavior:
Production:
Creation of utility.

Utility:
Usefulness of something.

Consumption:
Destruction of utility, reduces want satisfying capacity.

Exchange:
The transfer of property rights.

Property rights:
Rights held by person who is deemed owner of something to do whatever seems fit to dispose of it.

Specialization:
When people produce more of a commodity than they consume or plan to consume. Requires unequal endowment of resources and trading possibilities.

Opportunity cost:
The opportunity cost of one good is that amount of other goods that must be sacrificed in order to get an additional unit of the good in question.

Sunk cost:
A historical cost no longer relevant to the decision at hand. Sunk costs are sunk.