Key Concepts Learned

Here are five important ideas I’ve learned in my Econ classes at UMW:

  1. Prisoner’s dilemma
  2. Opportunity cost and rational choice
  3. Influences on supply and demand (because supply and demand run the world)
  4. MB = MC (marginal benefit = marginal cost)
  5. Elasticity
  1. Supply and Demand
  2. Opportunity Cost
  3. Comparative Advantage
  4. Marginal Utility
  5. GDP
  • models are not facts, they are interpretations
  • the key to prosperity is specialization
  • supply and demand are both equally important, one is not greater than the other
  • productivity is the manifestation of technology
  • economists can be wrong
  1. Taxes and Dead Weight Loss (mostly I just think this is cool)
  2. Opportunity Cost
  3. Diminishing Marginal Returns
  4. Game Theory
  5. Theory of Supply and Demand
  1. There will always be some unemployment as people change career paths and desired skill sets change.
  2. “Supply creates its own demand” does not imply that a supply of any good will attract consumers. Rather, the production process generates jobs and income that will go on to create demand somewhere in the economy.
  3. Studying the history of economics and how the field has evolved is beneficial in developing a better understanding of theories.
  4. Different people can assign various utilities to the same good or service.
  5. Every action and decision has an opportunity cost.
  1. Scarcity of resources.
  2. Incentives can have unintended consequences.
  3. Deadweight loss.
  4. The importance of opportunity cost.
  5. Positive & negative externalities
  1. When reading journals or articles you can save time by first scanning the introduction and the conclusion in order to save time.
  2. Although your results may not prove to be statistically significant, that does not mean that your hypothesis is wrong. You may not have found the correct set of data in order to prove your hypothesis. But an incorrect hypothesis is not worthless.
  3. Macroeconomics is broad. Modern macroeconomics have found interesting techniques to measure non-monetary data; for example Disability Adjusted Life Years (DALY).
  4. By making a model that explains a system you may inadvertently cause that system to change. People may try to manipulate the model and cause a shift.
  5. Economics is the study of scarcity and finding the most efficient method to utilize finite resources.
  1. The Concept of Marginal Analysis: That for every benefit, there is an associated cost, and these can be weighed.
  2. The Idea of Scarcity: That there are unlimited wants and limited resources.
  3. The Banking System: That banks can create money through lending practices.
  4. Greed/Fear as Determinants: That perceived or anticipated change in value can have supply and demand side implications.
  5. Externalities: That there is no free lunch, and we often have hidden costs (and benefits).
  1. Everything begins and ends with the models/graphs.
  2.  Real v nominal and when to use them(their time and place).
  3.  Long run and short run may(probably will) be vastly different.
  4. Pi is used to represent both profit(micro) and inflation(macro).
  5.  Some economists’ heads are so big that they think economics is THE social science and all other social sciences are branches of economics. (Wow, this surprised me very much and I would like to point these economists in the direction of a social science called sociology).
  1. Basic supply and demand models
  2. Monetary Policy and Fiscal policy (The roles in which the government and the Federal Reserve play in deterring each respectively)
  3. Arbitrage Pricing Theory
  4. Option Pricing Theory
  5. The rise of mathematics in the economic discipline (from history of economic thought)