ECON 101: PRINCIPLES OF MICROECONOMICS

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ECON 101: PRINCIPLES OF MICROECONOMICS Professor David Harrington Office hours Wed. & Sun. 1:00- 3:00 pm Office: Ascension Hall 309

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ECON 101: PRINCIPLES OF MICROECONOMICS. Professor David Harrington . Office: Ascension Hall 309. Office hours Wed. & Sun. 1:00-3:00 pm. Microeconomics. The study of the forces that determine the composition, allocation, and methods of producing society’s output. Who gets it?. - PowerPoint PPT Presentation

Transcript of ECON 101: PRINCIPLES OF MICROECONOMICS

Page 1: ECON 101: PRINCIPLES OF MICROECONOMICS

ECON 101: PRINCIPLES OF MICROECONOMICS

Professor David Harrington

Office hours Wed. & Sun. 1:00-3:00 pmOffice: Ascension Hall 309

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MicroeconomicsThe study of the forces that determine the composition, allocation, and methods of producing society’s output

What is produced?

Who gets it?How is it

produced?

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How do Societies arrive at answers to these questions? What “institutions” do they rely on?

Market Price System

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Tuna auction at the Tsukiji (pronounced tsu-kee-jee) fish market

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How do Societies arrive at answers to these questions? What “institutions” do they rely on?

Market Price System

GovernmentRegulationsTaxesSpendingGov Enterprises

Non-Gov Organizations (NGOs)

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What is Produced?

Bottom Billion (BB) live on $2/day

World’s Income

PyramidSurely, they are too poor to be targeted by markets.

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Single-Serve “Sachets” sell in India for ≈ 1¢

Shampoo Consumption

India > US

97% sold in sachets Indian companies sell tea, coffee, aspirin, and fruit juice in sachets

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Ethiopia

Children under-5 years old

(# deaths per 1000 live births)Ethiopia

Source: http://www.unicef.org/infobycountry

Mortality Rate of Young Children, 2008

sent 6 million sachets of PUR to Kenya, Malawi, and

Ethiopia in 2007

Sachet of water purifier

(10 cents)

109United States 8

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Market Government

What to produce?

How to produce it?

Who gets it?

Some “Answers” of Markets and Government

Shampoo sachets in

India

Water purifier sachets in Ethiopia

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Australian Pearl Diving, 1900-1915

Mother of Pearl Shells

Mother of Pearl Buttons

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Manual Air Pump

with Malay

Laborer

Japanese diver

How is it Produced? Australian Pearl Diving, 1900-1915

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White Australia Policy:

How is it Produced? Australian Pearl Diving, 1900-1915

The Australian government threatened pearl diving companies to hire white divers or face a ban on using immigrant labor.

Piston Air Pump

Cost $25,000 (in today’s $)

and was expensive to

maintain.

White diver

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Market Government

What to produce?

How to produce it?

Who gets it?

Some “Answers” of Markets and Government

Shampoo sachets in

India

Water purifier sachets in Ethiopia

Japanese Pearl Divers

LK is low

White Pearl Divers

LK is high

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CONTROL OF VACCINE: ARGUMENTS WEIGHED

U.S. Government Role on Anti-Polio Injections Arouses Controversy

By WILLIAM M. BLAIRSpecial to The new York Times.

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The incidence of polio

did not increase steadily over the first half of the 20th Century.

was lowest among infants under the age of one.

was higher in the summer than winter.

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The Incidence of Polio, 1937-1965Cases per 100 thousand people

1935 1937 1939 1941 1943 1945 1947 1949 1951 1953 1955 1957 1959 1961 1963 19650

5

10

15

20

25

30

35

40

45

50

55

60

The Incidence of Polio, 1937-1965

Gov licenses polio vaccine

Cases per 100 thousand people

The Incidence of Polio, 1937-1965

1935 1937 1939 1941 1943 1945 1947 1949 1951 1953 1955 1957 1959 1961 1963 19650

5

10

15

20

25

30

35

40

45

50

55

60

Gov licenses polio vaccine

29

Cases per 100 thousand people

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Who gets what society produces?

President Eisenhower

Secretary of Health Hobby

Jonas Salk, Developerof Polio Vaccine

President of March of Dimes O’Connor

government should allocate (the scarce) polio vaccine in 1955

argued

&

decided

government’s role ends with licensing… leave allocation to the market

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Panicking over Swine Flu, 2009

Pooh thought to himself:“If the pig sneezes, he’s friggin’ dead.”

Huffington Post, 04-30-09

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Swine Flu Plan Would Put Some Ahead for Vaccine

By Denise Grady(7/30/2009)

Swine Flu Plan Would Put Some Ahead for Vaccine

Swine Flu Plan Would Put Some Ahead for Vaccine

Panel of experts lay out plan for handling shortage

WEDNESDAY, July 29, 2009

Swine Flu Plan Would Put Some Ahead for Vaccine

Supply = 120 million doses

Demand >>> 159 million doses

Demand >> Supply

Gov. Distribution Plan

Shortage!

Swine Flu Plan Would Put

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Market Government

What to produce?

How to produce it?

Who gets it?

Some “Answers” of Markets and Government

Shampoo sachets in

India

Water purifier sachets in Ethiopia

Japanese Pearl Divers

LK is low

White Pearl Divers

LK is high

Polio Vaccine in April/1955

(Secretary Hobby)

Swine FluVaccine in 2009

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At Congressional hearings in the summer of 1955, the U.S. Surgeon General was asked: “Could it be that the vaccine was Hollywoodized and publicized before it was adequately tested?”

The Surgeon General was sure that the vaccine was safe and effective. How could he have been so sure?

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School Districts

2.5 million 2nd graders

16 cases per 100,000

Volunteers Non-Volunteers

57 cases per 100,000

Vaccine Placebo

36 cases per 100,000

Only 28% [(16/57)*100] as many cases among the treatment group, implying that the vaccine was 72% effective.

Salk Polio Vaccine Field Trials of 1954

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Chimney Sweeps

Percival Pott (1775): (Cancer Rate)CS > (Cancer Rate) non-CS

Chimney Sweeps (CS)

Association versus Causation: Perhaps there was something else in their lives that was causing the cancer

Naked CS

Holland

A few years later…

England

Banned

Not Banned

(Cancer Rate)CS

No ∆

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Study TypeAssignment to Treatment

& Control Groups

Salk Polio Vaccine Field Trials

Experiment by experimenters using

Chimney Sweeps in Holland & England

Natural Experiment

by differences that arise spontaneously in “nature,” akin to using