A firm, using two inputs K and L to produce one product, whose production function is 2 / 5 3/ 5 Q = 25L K

Outline The economics of asymmetric information Political economics Behavioral economics

The Theory of Consumer Choice The theory of consumer choice addresses the following questions: – Do all demand curves slope downward? – How do wages affect labor supply? – How do interest rates affect household saving?

Differences in Earningsin the U.S. Today The typical physician earns about $200,000a year. The typical police officer earns about$50,000 a year. The typical farm worker earns about$20,000 a year

Factors of Production Factors of production are the inputs used to produce goods and services

Types of Imperfectly Competitive Markets Monopolistic Competition – Many firms selling products that are similar but not identical. Oligopoly – Only a few sellers, each offering a similar or identical product to the others

“In this world nothing is certain but death and taxes.” . . . Benjamin Franklin 0 20 40 60 80 100 1789 Taxes paid in Ben Franklin’s time accounted for 5 percent of the average American’s income

International Trade What determines whether a countryimports or exports a good? Who gains and who loses from free tradeamong countries? What are the arguments that people usedto advocate trade restrictions?

Efficiency v. Equity – Efficiency means society gets the most that it can from its scarce resources. – Equity means the benefits of those resources are distributed fairly among the members of society

What is Project Risk Management? Project Risk Management Processes: Risk management planning Risk identification Qualitative risk analysis Quantitative risk analysis Risk response planning Risk monitoring and control