Inverted Class: Students required to watch L12, linked below, before coming to class.
Lecture on Thursday Dec. 28. Taken by Fouzia and Sabeela. Background required was:
L12: Realistic Models of the Housing Market
https://sites.google.com/site/economicsislamicapproach/ll12-realistic-s-d-models
Lecture provided further explanation of realistic S&D models.
Sample question for final:
1 What is the Law of One Price?
2 Explain how zero transaction costs and full information are both needed for Law of ONe Price AND for S&D theory
3 Explain how we can have multiple prices for identical goods -- failure of S&D AND of Law of One Price -- if there is transaction cost, and full information is not available to everybody.
4 Neoclassical theory argues that S&D equilibrium leads to EFFICIENT outcomes -- which maximize social welfare. Explain why this is not true, and why the outcomes can be bad from social point of view.
L12: Real Supply & Demand, instead of Varian's Fallacies - Background viewing for this class.
AM25: Realistic S&D Models - Explains how to construct realistic S&D models, which give very different results from textbooks. Fouzia/Sabeela