econ 101: principles of microeconomics
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ECON 101: PRINCIPLES OF MICROECONOMICS. Professor David Harrington . Office: Ascension Hall 309. Office hours Wed. & Sun. 1:00-3:00 pm. Microeconomics. The study of the forces that determine the composition, allocation, and methods of producing society’s output. Who gets it?. - PowerPoint PPT PresentationTRANSCRIPT
ECON 101: PRINCIPLES OF MICROECONOMICS
Professor David Harrington
Office hours Wed. & Sun. 1:00-3:00 pmOffice: Ascension Hall 309
MicroeconomicsThe study of the forces that determine the composition, allocation, and methods of producing society’s output
What is produced?
Who gets it?How is it
produced?
How do Societies arrive at answers to these questions? What “institutions” do they rely on?
Market Price System
Tuna auction at the Tsukiji (pronounced tsu-kee-jee) fish market
How do Societies arrive at answers to these questions? What “institutions” do they rely on?
Market Price System
GovernmentRegulationsTaxesSpendingGov Enterprises
Non-Gov Organizations (NGOs)
What is Produced?
Bottom Billion (BB) live on $2/day
World’s Income
PyramidSurely, they are too poor to be targeted by markets.
Single-Serve “Sachets” sell in India for ≈ 1¢
Shampoo Consumption
India > US
97% sold in sachets Indian companies sell tea, coffee, aspirin, and fruit juice in sachets
Ethiopia
Children under-5 years old
(# deaths per 1000 live births)Ethiopia
Source: http://www.unicef.org/infobycountry
Mortality Rate of Young Children, 2008
sent 6 million sachets of PUR to Kenya, Malawi, and
Ethiopia in 2007
Sachet of water purifier
(10 cents)
109United States 8
Market Government
What to produce?
How to produce it?
Who gets it?
Some “Answers” of Markets and Government
Shampoo sachets in
India
Water purifier sachets in Ethiopia
Australian Pearl Diving, 1900-1915
Mother of Pearl Shells
Mother of Pearl Buttons
Manual Air Pump
with Malay
Laborer
Japanese diver
How is it Produced? Australian Pearl Diving, 1900-1915
White Australia Policy:
How is it Produced? Australian Pearl Diving, 1900-1915
The Australian government threatened pearl diving companies to hire white divers or face a ban on using immigrant labor.
Piston Air Pump
Cost $25,000 (in today’s $)
and was expensive to
maintain.
White diver
Market Government
What to produce?
How to produce it?
Who gets it?
Some “Answers” of Markets and Government
Shampoo sachets in
India
Water purifier sachets in Ethiopia
Japanese Pearl Divers
LK is low
White Pearl Divers
LK is high
CONTROL OF VACCINE: ARGUMENTS WEIGHED
U.S. Government Role on Anti-Polio Injections Arouses Controversy
By WILLIAM M. BLAIRSpecial to The new York Times.
The incidence of polio
did not increase steadily over the first half of the 20th Century.
was lowest among infants under the age of one.
was higher in the summer than winter.
The Incidence of Polio, 1937-1965Cases per 100 thousand people
1935 1937 1939 1941 1943 1945 1947 1949 1951 1953 1955 1957 1959 1961 1963 19650
5
10
15
20
25
30
35
40
45
50
55
60
The Incidence of Polio, 1937-1965
Gov licenses polio vaccine
Cases per 100 thousand people
The Incidence of Polio, 1937-1965
1935 1937 1939 1941 1943 1945 1947 1949 1951 1953 1955 1957 1959 1961 1963 19650
5
10
15
20
25
30
35
40
45
50
55
60
Gov licenses polio vaccine
29
Cases per 100 thousand people
Who gets what society produces?
President Eisenhower
Secretary of Health Hobby
Jonas Salk, Developerof Polio Vaccine
President of March of Dimes O’Connor
government should allocate (the scarce) polio vaccine in 1955
argued
&
decided
government’s role ends with licensing… leave allocation to the market
Panicking over Swine Flu, 2009
Pooh thought to himself:“If the pig sneezes, he’s friggin’ dead.”
Huffington Post, 04-30-09
Swine Flu Plan Would Put Some Ahead for Vaccine
By Denise Grady(7/30/2009)
Swine Flu Plan Would Put Some Ahead for Vaccine
Swine Flu Plan Would Put Some Ahead for Vaccine
Panel of experts lay out plan for handling shortage
WEDNESDAY, July 29, 2009
Swine Flu Plan Would Put Some Ahead for Vaccine
Supply = 120 million doses
Demand >>> 159 million doses
Demand >> Supply
Gov. Distribution Plan
Shortage!
Swine Flu Plan Would Put
Market Government
What to produce?
How to produce it?
Who gets it?
Some “Answers” of Markets and Government
Shampoo sachets in
India
Water purifier sachets in Ethiopia
Japanese Pearl Divers
LK is low
White Pearl Divers
LK is high
Polio Vaccine in April/1955
(Secretary Hobby)
Swine FluVaccine in 2009
At Congressional hearings in the summer of 1955, the U.S. Surgeon General was asked: “Could it be that the vaccine was Hollywoodized and publicized before it was adequately tested?”
The Surgeon General was sure that the vaccine was safe and effective. How could he have been so sure?
School Districts
2.5 million 2nd graders
16 cases per 100,000
Volunteers Non-Volunteers
57 cases per 100,000
Vaccine Placebo
36 cases per 100,000
Only 28% [(16/57)*100] as many cases among the treatment group, implying that the vaccine was 72% effective.
Salk Polio Vaccine Field Trials of 1954
Chimney Sweeps
Percival Pott (1775): (Cancer Rate)CS > (Cancer Rate) non-CS
Chimney Sweeps (CS)
Association versus Causation: Perhaps there was something else in their lives that was causing the cancer
Naked CS
Holland
A few years later…
England
Banned
Not Banned
(Cancer Rate)CS
No ∆
Study TypeAssignment to Treatment
& Control Groups
Salk Polio Vaccine Field Trials
Experiment by experimenters using
Chimney Sweeps in Holland & England
Natural Experiment
by differences that arise spontaneously in “nature,” akin to using