Class summary 10/19

Econ  10/19/11

Should the bus driver stop just for one person to get on bus?

Mail the paycheck to others through FedEx: why are we so confident that there will be nothing wrong with process?

FedEx: (Perfect strangers) There are feedback loops to ensure the performance, there are some consequences, which connects to their reputation & competition

When you see a problem, think about why feedback loops are missing

Trade+Specialization

The real economy: The world is scarce, and we want things.

What do we need to produce?

Once it is produced, how to get it to people?

Inputs à Black Box à STUFF

Factors of production:

a.     Land (anything physically put by god)

b.     Labor (the natural stock of human being)

c.      Capital (something that first must be produced so that you can use it to produce something else)

1.     Physical Capital

2.     Human Capital (anything to improve your ability to make stuff, like informal or formal education)

                    Sacrifice stuff to provide capital

What exactly do we mean by economic activity? It is second you decide not to do something

a. Specialization

b. Exchange

c. Discovery

The more we become self sufficient, the less economic activity will be involved.

P.S.S.T

Patterns sustainable specialization trade

Millions people have different preferences; there is the problem of matching.

The well function of economy is these things get matched up rapidly and quickly

The challenge is how we deal with rapid technological changes

Confusion about trade:

nothing is created