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Reading Notes for Microeconomics: Canada in the Global Environment 10th edition, Michael Parkin and Robin Bade

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Course
ECON 101 Introduction to Microeconomics

Institution
ECON 101 Introduction To Microeconomics

Reading Notes for Microeconomics: Canada in the Global Environment 10th edition, Michael Parkin and Robin Bade. Chapter 1: Economics Chapter 2: The Economic Problem Marginal Benefit of a good Gains from Trade Economic Growth Economic Coordination Circular Flows Through Markets Coordinating ...

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econ 101
econ 101introduction to microeconomics
econ 101introduction to microeconomics notes
university of waterloo econ 101

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Epic Econ 1050 Notes
Reading Notes for Microeconomics: Canada in the Global Environment 10th edition, Michael Parkin and Robin Bade .
Chapter 1: Economics Compensating Losers Comparing Single Price Monopoly
Chapter 2: The Economic Problem Chapter 8: Utility and Demand and Competition``
Marginal Benefit of a good Consumption Possibilities Monopoly’s redistribution of
Gains from Trade Preferences surpluses
Economic Growth Utility-Maximizing Choice Rent Seeking
Economic Coordination Revealing Preferences Price-discriminating Monopoly
Circular Flows Through Markets Predictions of Marginal Utility Theory Monopoly Regulation
Coordinating Decisions The Paradox of Value Resolved Chapter 12: Monopolistic Competition
Chapter 3: Supply and Demand Behavioural Economics Monopolistic Competition
Competitive Market Neuroeconomics Measures of Concentration
Demand Controversy Limitations of a Concentration
Supply Chapter 9: Possibilities, Measure
Market Equilibrium Preferences, Choices Price and Output in Monopolistic
Chapter 4: Elasticity Consumption Possibilities Competition
Calculating price elasticity of demand Budget Equation Monopolistic Competition and
Inelastic and Elastic Demand Preferences and Indifference Perfect Competition
The factors that influence the Curves Is Monopolistic Competition
elasticity of demand Degree of Substitutability Efficient
Elasticity Along a Linear Demand Curve Predicting Consumer Choices Product Development and
Total Revenue and Elasticity A Change in Price (the effect of it Marketing
Your expenditure and your on the quantity of a good Advertising
elasticity consumed) Final note on the efficiency of
More elasticities of Demand A Change in Income Monopolistic Competition
Chapter 5: Efficiency and Equity Substitution Effect and Income Effect Chapter 14: Oligopoly
Resource Allocation Methods Chapter 10: Output and Costs Oligopoly
Force Economic Cost and Profit Game Theory
Benefit, Cost, and Surplus A Firm’s Opportunity Cost of Production Oligopoly Price-Fixing Game
Individual Demand and Market Economic Accounting Example A Game of Chicken
Demand Decisions Repeated Games and Sequential
Consumer Surplus (page 113) Product Concepts: Total Product; Games
Supply, Cost, and Minimum Marginal Product; Average Product A Sequential Entry Game in a
Supply-Price Cost Concepts: Total Cost; Contestable Market
Individual Supply and Market Marginal Cost; Average Cost Anti-Combine Law
Supply Cost Curves and Product Curves Chapter 15: Externalities
Producer Surplus Shifts in the Cost Curves Externality
Is the Competitive Market Efficient? Summary of COSTS Negative Externality: Pollution
Market Failure Long-Run Cost Positive Externality: Knowledge
Sources of Market Failures Short Run Cost and Long-Run Cost Chapter 16: Public Goods /
Is the Competitive Market Fair? Long-run average cost curve Common Resources
Chapter 6: Government Action in Economies and Diseconomies of Classifying Goods and Resources
Markets Scale Fourfold Classification
Rent ceiling Minimum Efficient Scale Public Goods
Minimum wage Chapter 11: Perfect Competition Political Equilibriums
Taxes Perfect Competition Why Government is Large and Growing
Production Quotas Economic Profit and Revenue Common Resources
Subsidies The Firm’s Decisions The Anatomy of Factor Markets
Markets for Illegal Goods The Firm’s Output Decision The Demand for a Factor of
Legalizing and Taxing Drugs Temporary Shutdown Decision Production
Chapter 7: Global Markets in Action Competitive Firm’s Supply Curve Labour Markets
How Global Markets Work Entry and Exit of a Market Capital and Natural Resource
Winners, Losers, and the Net Gain Competition and Efficiency → Markets
from Trade Efficient Use of Resources Rent-Versus-Buy-Decision
International Trade Restrictions Choices, Equilibrium and Efficiency Comparing Current and Future
The Case Against Protection Chapter 12: Monopoly Dollars
Avoiding Trade Wars Monopoly Discounting a Future Amount
Why is international Trade Monopoly Price-Setting Strategies Present value of a sequence of
Restricted? future amount

,Chapter 1 - Economics
Scarcity
● Our inability to satisfy all our wants. (p. 2)
● Something is scarce when there is a limited amount of it
○ Ex. Time in a day (24 hours a day)
○ Ex. oil
● Human wants are infinite, but we can’t have everything so we have to make choices

Incentive
● A reward that encourages an action or a penalty that discourages one. (p. 2)
● Ex. being paid money (to do a job)
● Prices act as incentives. If the price of a laptop is too high, more will be offered for
sale than people want to buy. And if the price is too low, fewer will be offered for sale
than people want to buy. But there is a price at which choices to buy and sell are
consistent.

Economics
● Study of choices agents make with incentives and scarcity
● Social science that studies the choices that individuals, binsinesses, governments,
and entire societies make as they cope with scarcity and the incentives that influence
and reconcile those choices
● Microeconomics
○ Study of
■ choices individuals/businesses make
■ way the choices interact in markets
■ Influence of governments
○ “Why are people downloading more movies?” is a microeconomic question
● Macroeconomics
○ Study of the performance of national economy and global economy
○ “Why does the Canadian unemployment rate fluctuate?” and “Can the Bank
of Canada make the unemployment rate fall by keeping interest rates low?”
are examples of Macroeconomic questions

Two big questions summarize the scope of economics
1. How do choices end up determining, what, how, and for whom goods and services
are produced?
2. Do choices made in the pursuit of self interest also promote the social interest?

Goods and Services
● Objects that people value and produce to satisfy wants

Factors of Production
● The productive resources used to produce goods and services
○ Land

, ■ Used to make goods and services
■ Natural Resources
● Land, oil, minerals, gas, water, fish, etc
○ Labour
■ Work time and work effort put into a product or service also
physical/mental efforts of all the people who work on a product /
service
■ Quality of labour depends on human capital
○ Capital
■ tools/instruments/buildings/other constructions that businesses use to
produce goods and services
■ Financial capital = money/stocks/bonds
● Financial capital is not used to produce goods/services
○ Entrepreneurship
■ Human resource that organized labour, land, capital to make
goods/services
■ Entrepreneurs think of new stuff and take on the risk of their decisions

Human Capital
● Knowledge and skill people obtain from education/work xp
● Expands over time (more human capital now per person than 50 years ago)

How income is made by people
● Land earns rent
● Labour earns wages/salary
○ Earns the most income (70% of all income is wages)
● Capital earns interest
● Entrepreneurship earns profit

Self-Interest
● Doing what’s best for YOU

Social interest
● Choices that are made in aims for the best outcome for society

Efficient
● A situation that can’t be improved
● Ex. resource use is efficient if its not possible to make someone better without
making someone else worse off
“Fair share”

Globalization
● Expansion of international trade, borrowing, and investment

, Six key ideas that define the economic way of thinking
● A choice is a tradeoff
○ Because if you decide to do one thing, you could have done another thing
since you have scarce (whatever) you’re doing with the decision
● People make rational choices by comparing benefits and costs
● Benefit is what you gain from something
● Cost is what you give up for something
● Most choices are “how-much” choices made at the margin.
● Choices respond to incentives
○ People undertake activities where marginal benefit is greater than marginal
cost

Tradeoff
● An exchange → Giving up one thing for something else

Rational Choice
● Rational choice is a choice that uses the available resources to best achieve the
objective of the person making the choice.

Benefit
● The gain, the positive
● Is determined by preferences
● Measured by the most that a person is willing to give up to get something

Preferences
● What a person likes and dislikes and the intensity of those feelings

Opportunity cost
● Highest-valued alternative that must be given up to get it

Margin
● When a choice is made by comparing a little more of something with its cost, the
choice is made at the margin
● Ask erin for help on this

Marginal Benefit
● Benefit that arises from an increase in an activity
● Ex. marginal benefit from one more night of study before a test is the boost it gives to
your grade

Marginal Cost
● Opportunity cost of an increase in an activity
● Ex. marginal cost of studying is not hanging out with friends

If the marginal cost is lower than the marginal benefit you make the decision

Positive Statements
● About what is

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