economics for engineers - part i
DESCRIPTION
Introduction to Business Economics for Engineers Thinking like an Economist! What are the basic tools for economic thinking? Can you really understand what economics is all about?TRANSCRIPT
Economics for Engineers – Part I Mohammad Tawfik
Economics for Engineers
Part 1
Economics for Engineers – Part I Mohammad Tawfik
Thinking like an Economist
Based on:
Thinking like an Economist: A Guide to Rational Decision
Making
By: Randall Bartlett, Ph.D.
Economics for Engineers – Part I Mohammad Tawfik
6 Principles of the Economist's Toolkit
Economics for Engineers – Part I Mohammad Tawfik
Principle Number 1:
People respond to incentives.
Economics for Engineers – Part I Mohammad Tawfik
We need to anticipate the incentives we are
creating when introducing policies!
Economics for Engineers – Part I Mohammad Tawfik
Principle number 2:
There is no such thing as a free lunch
Economics for Engineers – Part I Mohammad Tawfik
Opportunity Cost
Economics for Engineers – Part I Mohammad Tawfik
Resources are scarce!
Time, money, food
Economics for Engineers – Part I Mohammad Tawfik
Principle number 3: No thing is just one thing;
There are always at least 2 sides to every
interaction.
Economics for Engineers – Part I Mohammad Tawfik
Every buy is a sell
Economics for Engineers – Part I Mohammad Tawfik
If we do not spend money, no one
will earn money!
Economics for Engineers – Part I Mohammad Tawfik
Principle number 4: The law of unanticipated
influences
Economics for Engineers – Part I Mohammad Tawfik
Butterfly effect!
Economics for Engineers – Part I Mohammad Tawfik
Medical cost will increase when disturbance
happens in Iran!
Economics for Engineers – Part I Mohammad Tawfik
Bombing in Iraq results in
a drop of tourism in Egypt!
Economics for Engineers – Part I Mohammad Tawfik
Principle Number 4:
The Law of unanticipated consequences
Economics for Engineers – Part I Mohammad Tawfik
Accidents because of red-light cameras!
Economics for Engineers – Part I Mohammad Tawfik
Economics for Engineers – Part I Mohammad Tawfik
Principle number 6:
No one is, and no one ever can be, in complete
control.
Economics for Engineers – Part I Mohammad Tawfik
Principle number 6:
No one is, and no one ever can be, in complete
control.
Economics for Engineers – Part I Mohammad Tawfik
Economics for Engineers – Part I Mohammad Tawfik
3 Core Concepts
Economics for Engineers – Part I Mohammad Tawfik
I - Rationality
Economics for Engineers – Part I Mohammad Tawfik
I - Rationality
Economics for Engineers – Part I Mohammad Tawfik
Economics for Engineers – Part I Mohammad Tawfik
Personal preferences.
How we decide not to what we decide!
Economics for Engineers – Part I Mohammad Tawfik
Your preferences appear in your choices!
Economics for Engineers – Part I Mohammad Tawfik
II – Marginal Analysis
Economics for Engineers – Part I Mohammad Tawfik
Economics for Engineers – Part I Mohammad Tawfik
If we woke up tomorrow and gas prices had
doubled, how would that affect automobile usage?
Economics for Engineers – Part I Mohammad Tawfik
Economics for Engineers – Part I Mohammad Tawfik
Increasing
spending in
crime prevention
Economics for Engineers – Part I Mohammad Tawfik
Water-Diamond Paradigm
Value in use vs. Value in Exchange
Economics for Engineers – Part I Mohammad Tawfik
III - Optimization
Economics for Engineers – Part I Mohammad Tawfik
Equi-marginal Analysis
Economics for Engineers – Part I Mohammad Tawfik
Imagine yourself on a new TV reality
show.
Economics for Engineers – Part I Mohammad Tawfik
The Price of Safety!
Economics for Engineers – Part I Mohammad Tawfik
How to achieve Economic Efficiency?
Economics for Engineers – Part I Mohammad Tawfik
Economists define efficiency as people being
made better off.
Economics for Engineers – Part I Mohammad Tawfik
They figured they could not find a strong, objective
measure of social welfare, so they settled for a
very weak one instead
Economics for Engineers – Part I Mohammad Tawfik
Pareto Optimum
Economics for Engineers – Part I Mohammad Tawfik
If we take a number of people, and something
makes any one of them better off by their own
judgment without making anyone else worse off,
that is an unambiguous social improvement.
Economics for Engineers – Part I Mohammad Tawfik
Incentives and Tragedy of the
Commons
Economics for Engineers – Part I Mohammad Tawfik
Tradable Quotas
Economics for Engineers – Part I Mohammad Tawfik
Future Values – Discount Rate
Economics for Engineers – Part I Mohammad Tawfik
Behavioral Economics
Economics for Engineers – Part I Mohammad Tawfik
The Ultimatum Game
Economics for Engineers – Part I Mohammad Tawfik
Anchor Points
Economics for Engineers – Part I Mohammad Tawfik
Endowment Effect
Economics for Engineers – Part I Mohammad Tawfik
Status Quo Effect