ECON 426 Study Guide - Winter 2018, Comprehensive Midterm Notes - Labour Economics, Production Function, Marginal Cost
12 Oct 2018
School
Department
Course
Professor
ECON 426
MIDTERM EXAM
STUDY GUIDE
Fall 2018
Office Hours 3-4:30
Midterm - Feb 19th (in class)
Simplifications
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Can be manipulated
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Representations of reality
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Internally consistent
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Provide language for relevant phenomena
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Coherence:
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Simple to use
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Testable across wide range of phenomena
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Not rejected by data
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Desirable features of Models?
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Are there logical errors - is the model coherent?
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What are all the implications of the model?
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Do these implications match the data?
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What assumptions could be relaxed? Costs and benefits of different assumptions?
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First, understand the logic of the model staying within the assumptions. Then:
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Tips for working with models
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Models
Foundation of most of mainstream modern economic theory
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Who makes the decision?
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What do they want to maximize?
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What options can they choose from?
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Decision-makers are rational individual agents
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Equilibrium to model interactions
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Positive "Pillars" of Neoclassical Approach:
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i.e., no one individual can be better off without making another individual worse off
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An allocation is pareto efficient if, given society's resources, there's no other feasible allocation that can increase the
well-being of one or more members of the group, while leaving the well-being of all the other members unchanged
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Normative "Pillar": Pareto Efficiency
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Sharing a Cake:
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Neoclassical Economics
Lecture 1 - Introduction
Monday, January 8, 2018
1:43 PM
ECON 426 Page 1
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