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Mayank Gupta
I Efficiency
I Equilibrium (including long-run analysis)
I Coordination of actions of economic agents
I Economics is a study of allocating rare (scarce) resources among
competing (unlimited) ends
I Provision of incentives for action
I Economics studies (material) incentives (or lack thereof) for taking
economic or other actions
I Feasibility (e.g. incentive compatibility, reconciliation of different
social values, economic feasibility of socio-economic policy reforms)
1 Incomes rose sharply in many countries after 1800 but declined in others
Influential Ideas in the Evolution of Economics 4
GDP Per Capita 1500-1950
I Assumptions:
I 5 million is the value of agricultural production
I 3 million – costs of production in agriculture (1 – depreciation of
fixed capital, 2 – wages)
I 2 million – net product