Slemlecks ler Prirci|les t lcrmics (as a Disci|lire)

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1 7GEVGMX] lcrmists study situatirs wlere reeds r warts exceed mears
lleretre, |e|le lave t make clices
2 6EXMSREPMX] is assumed t guide |e|le's clices r decisirs lley systematically
gauge all |rs (leretit r 'utility') ard crs ('cst') t all alterratives r |tirs tley
are tacirg wler decidirg
3 4VIJIVIRGIW Pe|le are egui||ed witl tixed ard giver |retererces tlat allw tlem
t assigr utilities t all |tirs, ard t clse tle |tir tlat maximizes (ret) utility
4 6IWXVMGXMSRW Pe|le tace crstrairs tlat tley carrt clarge tlemselves, ard tlus
lave t take as giver (sucl as ludgets, ir|ut cst etc) - Cmlirirg tle tirst tur
|irts makes u| tr tle 'ratiral clice a||racl' t Neclassical ecrmics
5 3TTSVXYRMX] 'SWX is irduced ly scarcity, ard ly tle reed t make clices All
clices always irvlve ||rturity cst lecause decidirg ir tavr t re |tir
always mears decidirg agairst sme tler |tir(s) llere are tw mair as|ects t
||rturity cst 1) ltility maximizirg clices irduce ||rturity cst t le mirimal
(:a! a:[~) 2) Clices may le revised wler ||rturity cst rises (u,ua!
a:[~)
6 lle )GSRSQMG4VMRGMTPI is tle a||licatir t ratirality t situatirs t scarcity
Virimize cst witl regard t a giver gal (eg, level t utility) K maximize utility
r ut|ut tr a giver level t cst r ir|ut Herce tle 'ecrmic |rirci|le' trames
situatirs as a mirimizirg r a maximizirg |rllem, ard allws t assess etticiercy
D rt mix tle tw trmulatirs! A||lyirg tle |rirci|le avids wastirg valualle
resurces
)JJMGMIRG] t activities, rules, trarsactirs r distrilutirs is a lasic tleme ir
ecrmic aralysis ltticiercy is mst tter assessed eitler ir terms t tle ecrmic
|rirci|le (mirimize cst r maximize utility) r tle Paret criterir (witl regard t
trarsactirs ard distrilutirs)
8 1EVKMREP%REP]WMW is a ty|ical way tr ecrmists t lk at |rllems lley aralyze
decisirs ir terms t margiral leretits ard margiral csts Vargiral tlirkirg is ratler
urcmmr amrg rr-ecrmists, lwever
9 )UYMPMFVMYQ is a turdamertal rtir ir ecrmic aralysis Basic ecrmic mdels
deal witl tle cm|arisr t tw (r |ssilly mre) eguililria ([a:a!:~ :a!:)
lcrmist tlirk ir terms t eguililria, wlicl are situatirs wlere r re las ar
ircertive t clarge lis r ler lelavir lle Nasl eguililrium is tle mst
turdamertal trmulatir t tle crce|t t eguililrium as used ir ecrmics
10 +EQI8LISV] is ar a||racl t study situatirs t irterde|erderce wlere |e|le
lave ircertives t tlirk ard lelave strategically