there is a choice exercise in the slides that isn't here, but I'd like it to be in some form...

Should identify the relevant benefit and costs that need to be weighed.

not relevant please delete

could be a reward (ie: the carrot) could be a punishment (ie: the stick)

Rational Agents Respond to Incentives

move after thinking at the margin after rationality

move after rationality

This should be the first frame and should begin with:

Rationality is the most important assumption regarding the behavior of economic agents. If we don't assume that agents behave rationally when it comes to making decisions, there isn't a lot of economics that can be done. We will discuss the role that assumptions play in economic models in the coming segments.

When we say that an agent is behaving rationally, we mean that 1) The agent systematically and purposefully makes decisions in his/her best interest. 2) The agent is an optimizer - he/she tries to make the best decision for his/her own well-being. 3) The agent "thinks at the margin" by carefully comparing the costs and benefits of an incremental change to an existing plan of action.

should be deleted

Every decision involves tradeoffs (can reference the A vs. B abstract example earlier). Every tradeoff defines an opportunity cost measuring the full value of what is given up relative to the best foregone alternative. It is only by understanding the full cost of a decision - the explicit cash outlays and the implicit costs of foregone opportunity - that we will be able to make predictions of how rational agents (we will define this term momentarily) will behave when faced with such choices.

Delete this frame. Replace with:

Let's revisit the abstract choice, but let's consider three options: A, B, or C. The individual can only choose one of the three options and hence, implicitly faces a tradeoff implied by foregoing the other two.

Suppose that the individual ranks A as the most preferred option and C as the least preferred option (so that B is ranked in the middle).

If the individual chooses the option they like the most, they will choose option A.

The tradeoff: the individual has given up two alternative options, B and C, by choosing option A. We will argue that a component of this tradeoff that defines the implicit opportunity cost associated with the choice of option A.

Implicit cost of a decision: the value of the best foregone alternative. Since we ranked B above C, B would be the best foregone (not chosen) alternative when choosing A. Therefore the subjective value of option B defines the implicit cost (what was given up) when choosing option A.

Sometimes, we refer to the opportunity cost of a decision as full value of what has been given up - this includes the subjective value of the best foregone alternative, but may also include explicit costs that actually require a cash outlay.

this should be deleted

Please delete this and add a frame with a few examples of positive and normative statements.

Normative statements suggest how the world ought to be.

You can easily identify a normative statement if it contains the word "should."

Normative statements depend on an individual's value judgments (regarding who should get what), making them subjective.

Since normative statements are essentially subjective opinions, they cannot be confirmed or refuted with data.

Statements

Positive statements are descriptive statements that attempt to describe the world as it is.

Facts are examples of positive statements, but not all positive statements are true.

Positive statements can be confirmed or refuted with appropriate data.

Delete this part of the frame. Economics certainly does suggest what should be done (we optimize things all the time to figure out the best solution).

statements

There should be a frame discussing the two roles of an economist prior to the introduction of positive/normative. The first role should be as a scientist - describing how the world works with respect to decision making constrained by scarcity. The second role is as a policy advisor - prescribing how to improve the world.

Statements

this entire frame needs to be reworked so that it is not a redundant redefinition of the equity and efficiency concepts defined earlier. I think it would also be good to discuss the idea of a "pie transfer" and how trying to make a more equitable distribution can reduce incentives. Recall the baking analogy I used in class.

delete this part of the slide and see note on part below

move this to be the frame prior to introducing positive vs normative statements - that will be good motivation for why we are discussing that issue... so that students can decipher fact from opinion in the media.

The policy goal of "equity" aims at making sure there is a uniform distribution of the benefits so that agents receive the same slice of the economic pie.

When individuals are concerned with how fair a policy is, they are often looking through the lens of "equity" as the policy goal.

implies

, generating maximal societal benefits resulting from economic interaction.

The policy goal of "efficiency"...

the benefits resulting from economic interaction (ie: trade) can be thought of as a "pie" of value generated that is divided or allocated among the members of a society. We can concern ourselves with the size of the entire pie as well as with how the pie is cut or divided among members of society.

please also add the specific definition of microeconomics: the study of how individuals make decisions when constrained by scarcity and compare this to macroeconomics: the study of economy wide phenomena

Please define an economy as: "a group of agents interacting." At the end of this frame to lead into the definition of agents in the next.

Delete this frame.

Delete this frame.

Please add the following example at the very end:

Consider an individual choosing between two abstract options A and B. For any choice, the individual faces a tradeoff. Choosing option A means that the individual implicitly "gives up" option B (the tradeoff). Conversely, choosing option B means that the individual has implicitly "given up" option A (the tradeoff). We will be able to think about how tradeoffs can help us think about quantifying the full cost of a decision.

other purposes (such as producing energy, consumer goods, etc.).

reallocating resources

means you have less time to study, potentially reducing your exam performance.

an exam

delete

delete

affect

or even entire nations.

constrained by

have not defined a tradeoff yet - this comes later

not a complete sentence. change to "Specifically, economics looks to answer the question of how society chooses to allocate (manage) scarce resources."

I would then define an allocation in relation to the question that follows regarding how much gets produced, consumed, who does the producing and consuming.