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So, do you agree that it is GOOD for
the people of Florida if, after a hurricane strikes, the
price of plywood (or other products) increases from $10 a
sheet to $30 a sheet? Or, that it was GOOD when the
Coca-Cola company (or other companies) layed off 6000
workers as they did in the year 2000 assuming that they
could still produce the same quantity, but with fewer
workers? Even if you do not agree, do you understand that
these things will reduce scarcity and increase society's
satisfaction? In lesson 5a we will learn why the prices of
products like gasoline, soda pop, and junk food, may be TOO
LOW. (Isn't this fun?)
Lesson 1c introduces our first
graphic MODEL: the budget line. For many students
microeconomics is a difficult course. I think there are two
reasons for this. First, we will learn theories or models,
rather than facts. Facts are easy to memorize. Theories or
models have to be learned and practiced. And second, we will
express our theories or models on graphs, and many students
do not like graphs. If you want to be successful in this
course you must learn to use our graphical models. You must
be able to draw the graphs correctly from memory, you must
understand what each line on the graph represents, and you
must know why each line has the shape that it does. For each
graph be able to: DEFINE, DRAW, DESCRIBE its shape. Be sure
to study the graphs in the textbook carefully and plot all
the graphs in the yellow pages. Finally, an easier way to
view graphs is to remember that each point on a graph
represents two numbers. Find a point on a graph, then find
the two number from the graph's axes.
Note: not all models are graphs. For
example, the 5Es of Economics is a model of the issues
studied by economists.
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