Author Topic: Microeconomics textbook....  (Read 3550 times)

caliq

  • Pencil Stache
  • ****
  • Posts: 675
Microeconomics textbook....
« on: January 26, 2015, 03:31:09 PM »
I have to take 100-level microeconomics as a pre-requisite for pharmacy school, and I just sat down to read the first chapter so I can do my homework (yep, I am procrastinating by keeping a MMM tab open...tsk tsk).

Anyways, the first sentence is:

Quote
Would you like a new car, a nicer home, better meals, more free time, a more interesting social life, more spending money, more leisure, more sleep?

The paragraph continues and starts talking about using income to buy Disney World trips and "thousands of other goods and services."

There is zero reference to or implication of any type of savings in this introduction :( Apparently income can only be used for consumption...

Cpa Cat

  • Handlebar Stache
  • *****
  • Posts: 1564
Re: Microeconomics textbook....
« Reply #1 on: January 26, 2015, 03:45:10 PM »
I have to take 100-level microeconomics as a pre-requisite for pharmacy school, and I just sat down to read the first chapter so I can do my homework (yep, I am procrastinating by keeping a MMM tab open...tsk tsk).

Anyways, the first sentence is:

Quote
Would you like a new car, a nicer home, better meals, more free time, a more interesting social life, more spending money, more leisure, more sleep?

The paragraph continues and starts talking about using income to buy Disney World trips and "thousands of other goods and services."

There is zero reference to or implication of any type of savings in this introduction :( Apparently income can only be used for consumption...

The marginal propensity to save is a macroeconomic concept. In Microeconomic theory, individuals are consumers. That is all they do. Every choice comes with an opportunity cost.

Why else would you save? If not to consume more leisure time, or larger items? Microeconomics isn't about budgets or investing (unless you are a firm, in which case, you may invest in capital).

Dictionary Time

  • 5 O'Clock Shadow
  • *
  • Posts: 82
Re: Microeconomics textbook....
« Reply #2 on: January 26, 2015, 03:48:01 PM »


There is zero reference to or implication of any type of savings in this introduction :( Apparently income can only be used for consumption...

Saving is basically deferring consumption.  You're going to consume your $$ eventually (or your heirs will).

caliq

  • Pencil Stache
  • ****
  • Posts: 675
Re: Microeconomics textbook....
« Reply #3 on: January 26, 2015, 04:02:33 PM »
Does giving away savings count as consumption, because the charity would then consume it to help others?

Clearly I actually need to pay attention to this class xD

EarlyStart

  • Stubble
  • **
  • Posts: 115
Re: Microeconomics textbook....
« Reply #4 on: January 26, 2015, 06:46:12 PM »
I have to take 100-level microeconomics as a pre-requisite for pharmacy school, and I just sat down to read the first chapter so I can do my homework (yep, I am procrastinating by keeping a MMM tab open...tsk tsk).

Anyways, the first sentence is:

Quote
Would you like a new car, a nicer home, better meals, more free time, a more interesting social life, more spending money, more leisure, more sleep?

The paragraph continues and starts talking about using income to buy Disney World trips and "thousands of other goods and services."

There is zero reference to or implication of any type of savings in this introduction :( Apparently income can only be used for consumption...

The marginal propensity to save is a macroeconomic concept. In Microeconomic theory, individuals are consumers. That is all they do. Every choice comes with an opportunity cost.

Why else would you save? If not to consume more leisure time, or larger items? Microeconomics isn't about budgets or investing (unless you are a firm, in which case, you may invest in capital).


I'll second this. I tutor economics at a college. The lesson operates under the assumption that an individual is a consumer. "ceteris paribus", or "all else equal" is used here so that you can specifically focus on consumption behavior. Later you'll probably talk about "the firm", which is just the individual while s/he is at work. Here you'll assume all production and no consumption.


You'll learn about declining marginal utility and how an individual decides whether or not to work the 41st hour of every week. It's pretty interesting. That's kind of a mustachian topic.



caliq

  • Pencil Stache
  • ****
  • Posts: 675
Re: Microeconomics textbook....
« Reply #5 on: January 26, 2015, 07:03:27 PM »
I have to take 100-level microeconomics as a pre-requisite for pharmacy school, and I just sat down to read the first chapter so I can do my homework (yep, I am procrastinating by keeping a MMM tab open...tsk tsk).

Anyways, the first sentence is:

Quote
Would you like a new car, a nicer home, better meals, more free time, a more interesting social life, more spending money, more leisure, more sleep?

The paragraph continues and starts talking about using income to buy Disney World trips and "thousands of other goods and services."

There is zero reference to or implication of any type of savings in this introduction :( Apparently income can only be used for consumption...

The marginal propensity to save is a macroeconomic concept. In Microeconomic theory, individuals are consumers. That is all they do. Every choice comes with an opportunity cost.

Why else would you save? If not to consume more leisure time, or larger items? Microeconomics isn't about budgets or investing (unless you are a firm, in which case, you may invest in capital).


I'll second this. I tutor economics at a college. The lesson operates under the assumption that an individual is a consumer. "ceteris paribus", or "all else equal" is used here so that you can specifically focus on consumption behavior. Later you'll probably talk about "the firm", which is just the individual while s/he is at work. Here you'll assume all production and no consumption.


You'll learn about declining marginal utility and how an individual decides whether or not to work the 41st hour of every week. It's pretty interesting. That's kind of a mustachian topic.

Yep -- finished my reading :) It is interesting! Which is hilarious to me because I was a business major for literally the first day of my first semester freshman year, went to one microeconomics class and found it horribly boring, and promptly changed my major immediately after class.  Funny what a couple years can do to one's perspective!

robotclown

  • Stubble
  • **
  • Posts: 152
Re: Microeconomics textbook....
« Reply #6 on: January 26, 2015, 09:05:11 PM »
More free time and leisure are in there.  But income is only used for consumption; money has no value except for the amount of goods/services it can buy. 

As others mentioned, macroeconomics has to do with saving, because saving it in a bank allows banks to create more loans, to give to consumers, to increase consumption.  Saving by investing in a company allows the company to use that capital to make more stuff, or hire more people or whatever.  Microeconomics doesn't care about the secondary effects.

caliq

  • Pencil Stache
  • ****
  • Posts: 675
Re: Microeconomics textbook....
« Reply #7 on: January 26, 2015, 09:23:49 PM »
I think what I'm kind of struggling with is the "unlimited wants" phrasing?  I mean, realistically, even if I had the net worth of Warren Buffet, I wouldn't be capable of spending all of it -- doesn't that mean there is a limit to my "wants"?  Or is that issue avoided because leisure time is a "want"?

Cpa Cat

  • Handlebar Stache
  • *****
  • Posts: 1564
Re: Microeconomics textbook....
« Reply #8 on: January 27, 2015, 06:46:26 AM »
I think what I'm kind of struggling with is the "unlimited wants" phrasing?  I mean, realistically, even if I had the net worth of Warren Buffet, I wouldn't be capable of spending all of it -- doesn't that mean there is a limit to my "wants"?  Or is that issue avoided because leisure time is a "want"?

Warren Buffet could write a check tomorrow to some charity and spend every last dollar. In fact, he has already initiated that process. He has been very open about the fact that after he and wife die, his descendants will receive very little.

It is always possible to spend all the money.

But remember this while reading your economics textbook. In economics, the consumer makes perfectly rational decisions in order to maximize their "utility" (which is like happiness - except not, because in economics, consumers don't make decisions based on feelings. So it's more like maximizing your spending potential with robotic efficiency).

Don't mistake consumers with real people, like yourself. When you find yourself saying, "But that's not really what people do/think/act..." remember that they aren't real people. Economic theory doesn't concern itself with individual behavior in the truest sense - that's what psychology is for.

Consumers are Theoretical Robot People. When they see money, they see its potential. They are always using it or planning to use it for something. They never leave money idle.

Gah! Then what's the point of all of this mumbo jumbo, if it's not even about real things?! Well, as it turns out, when consumer behavior is taken as a whole - when we're all averaged out - what we do really does closely resemble the behavior of an army of Robot Consumers.

caliq

  • Pencil Stache
  • ****
  • Posts: 675
Re: Microeconomics textbook....
« Reply #9 on: January 27, 2015, 06:52:01 AM »
Thanks for explaining it!  I have to turn on my "science mind" I guess -- I was expecting it to be more like psychology/sociology.

Cpa Cat

  • Handlebar Stache
  • *****
  • Posts: 1564
Re: Microeconomics textbook....
« Reply #10 on: January 27, 2015, 07:19:42 AM »
Thanks for explaining it!  I have to turn on my "science mind" I guess -- I was expecting it to be more like psychology/sociology.

It's a social study, like psychology and sociology. But where psychology is about individual behavior and sociology is about societal/cultural behavior, microeconomics is about consumer (and producer) behavior.

It doesn't have to bother with things like mental illness, or wars, or death, or love, or social mores.

None of that matters, because according to economic theory, the consumer is still going to enter the marketplace and make perfectly rational, efficient spending decisions - everything else is background noise.