Lecture 2 The Economists Toolkit

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Lecture 2 - The Economists Toolkit

• Wissinks Words

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remarks

• This is an important all-purpose lecture.
• A lecture to get you started thinking like an
  economist.
• A lecture to introduce you to the tools most
  frequently used by economists.
• A lecture that stresses some very basic concepts.

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a running theme

• If you pay careful and close attention you will
  notice a theme or a modus operandi running
  throughout nearly all of our discussions.
• The m.o.
• set up an optimizing problem or model,
• figure out how the model works and what
  characterizes a solution,
• use the model to make predictions concerning how
  the players in the model react to changes in
  their environment.

4
observations

• The tools and approach developed in this lecture
  are employed throughout the entire course.
• The tools and approach developed in this lecture
  also have wide applicability to other situations
  that you may not think of as being economics
  per se, but actually do have economic content.
• Any issue that involves choice has economic
  content.

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remember

• Economists look at both benefits and costs.
• Economists look at marginal benefits and marginal
  costs when analyzing optimizing behavior.
• Economists rely very heavily on graphs, equations
  and functional relationships to make sense of the
  models they construct. Get used to it.