This midterm study guide for SOCIOL 173 at UCLA combines information from class notes and assigned readings to create a thorough review resource. It covers essential topics such as economic sociology, behavioral economics, organizational decision-making, and the role of the state in market institut...
Microeconomics studies individual markets, firms, and transactions between consumers and
producers. Unlike sociology, psychology, and anthropology, which focus on broader human
behavior and cultural practices, economics specifically deals with how resources are allocated
and how markets function.
For example, the telecommunications industry has seen a dramatic change in pricing, where
once it cost the inflation-adjusted equivalent of $12 for a three-minute long-distance phone call
in the 1960s, and now with the internet, people can make unlimited calls for free. This shift in
pricing reflects how microeconomic principles shape real-world consumer behavior and market
evolution.
Micro-Economics Concepts
Low vs High-Valued Uses: This concept refers to how resources are used in ways that bring the
most benefit or value. Opportunity cost plays a big role here—it’s what you give up by
choosing one option over another. So, if a resource (like oil) can be used in different ways, you
want to allocate it to the option that brings the highest return or value.
- For example, during the 2020 oil price war, Saudi Arabia and Russia lowered their oil
prices to hurt North American oil producers (who had higher costs). By doing this, they
chose to sell their oil cheaply in the short term to drive out competition and dominate the
market in the long run. They sacrificed short-term profit (low-value use) for future
market control (high-value use).
Low vs High-Cost Providers: Low-cost providers can offer goods at a lower price, allowing
them to dominate markets. For example, McDonald's uses self-checkout kiosks to substitute
labor, which reduces costs and helps the company provide cheaper meals than restaurants relying
on traditional cashiers.
Demand Curves: The demand curve illustrates how consumers’ willingness to purchase changes
as the price shifts. In the 1870s, the high cost of sending a telegram ($15 adjusted for inflation)
restricted its use to high-value communications. As communication became cheaper (e.g.,
texting), demand for lower-value uses increased.
Supply Curves: The supply curve reflects how much producers are willing to sell at various
prices. Fracking technology shifted the supply curve for oil and natural gas by lowering
production costs, allowing companies to increase supply at any given price.
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