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Economics; Different Perspective
? Economics is the knowledge of the choices taken by people who are faced with scarcity.
? Scarcity is a condition in which resources are restricted but can be utilized in various ways; so one good or service should be sacrificed for the other one.
Society’s Choices
? The decisions of consumers, producers, and government decide how an economic system answers 3 fundamental questions:
1. What products do we manufacture?
2. How do we manufacture these products?
3. Who consumes or intakes the products?
1. Consider a world with two assets: a riskless asset paying a zero interest rate, and a risky asset whose return r can take values +10% or –8% with equal probability. An individua
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Cyclical Fluctuations: Consider a situation where the value of money above trend indicates an unexpectedly high level of money in the recent past. The model predicts that this
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Demonstrate mathematically that the equilibrium condition MRS PB PA is the equivalent of the utility-maximizing rule MU AP A MU B PB .
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