Wednesday, April 21st, 1999

Announcements: None

Lecture notes:

I. Effect of Population and Food Supply
    A. Study started in the 19th century by Thomas Mathus
    B. He believed that the food supply would lag as teh population increase
        1. The food supply had linear growth
        2. Population grows expodentially because he was living in the 19th century England
        3. System was run by gentry
            a. They held most of the land
            b. Cost was high
            c. Inefficient system
            d. Technology improved because gentry put money in
            e. eventually abandoned system; 1st tried to protect the system with tariffs
    C. Two problems:
        1. System he observed was not true of all systems
        2. He didn't understand that social/behavior science is different the regular science
 II. Economist in Maryland bet anyone to buy a commodity (i.e. food), it will go down in 10 years
    A.  If food goes up, you will adjust your eating habits accordingly
        1. 18th century New England there was a law against feeding servants too many lobsters
        2. Today, lobsters are considered more valuable because they are scarce
    B. In the 1970s, oil stocks
        1. Limited supply
        2. People thought there was only enough oil to get us to 20th century
    C. People had incentive to look in places they haven't looked before
        1. Price went up, so people looked elsewhere
        2. Found oil in the North Sea between UK and Norway
III. Why do University prices go up faster than inflation?
    A. Pay partly for school name (luxury item)
    B. Example: Nike
        1. Shoes are only a few dollars to make
        2. People pay $100 for them because it shows something about you
    C. A lot of funding for education comes from state legislator
        1. More resistant to pay for school
IV. States are interested in things internationally, they generally need the help other countries
    A. US was responsible for acid rain in Europe
        1. Causes damage to buildings, forests and statues
    B. US factories cause acid rain
    C. Europeans were concerned, could try to solve, but need the help of the US
V. Collective Goods Problems
     A. Don't fit into interactions
        1. Doesn't fit economic supply and demain
    B. Most important concern for government is to solve problems that the industry couldn't solve
VI. Public Good Problems (PGP)
    A. Not, excludable or rival ( a public park)
    B. A highway doesn't belong to any group/individual
    C. My consumption won't decrease my consumption
    D. PGP are things we don't normally think about
    E. Amusement parks are PGPs once you get in
        1. Must wait in line
        2. Limited supply
VII. Private Good Problems
    A. A hamburger from McDonald's belongs to them until you exchange money for it
    B. Exclusive can assign property rights
    C. Rival- you have it, no one else can us it
VIII. Problem Internationally
     A. Every country has incentive
     B. Example: Group of friends picking a resturant
        1. None wants to be embarrassed or rejected by group
        2. Would rather that someone else make a suggestion
    C. When paying under a single tab, they always end up short becaue people try to cheat