The Economy 2.0 — Microeconomics

Take a closer look at the units of the microeconomics volume of The Economy 2.0: what they’re about, what models they present, how they’re changing compared with The Economy 1.0.

 

Unit 3 — Doing the best you can: Scarcity, wellbeing, and working hours

Summary

Unit 3 uses the choice of working hours as an example of decision-making under scarcity, where people face a trade-off between free time and consumption. This question is used to motivate the use of constrained choice problems – where students learn about preferences (indifference curves), constraints (the feasible set), and the mechanics of how a person can make a decision that maximizes their utility by balancing the trade-off they are willing to make with the trade-off they are constrained to make by the budget constraint. The framework of constrained choice problems introduced in Unit 3 is used extensively in other units.

 

Models

Unit 3 applies the model to various interesting questions, such as changes in working hours over time, differences between countries, and the division of labour within a household. After explaining the model and applying it, the unit asks ‘what is left out of the model?’.

 

Major changes

The production function is no longer included in this unit, simplifying the analysis.

 

The header

This is the header we’ve chosen for Unit 3.

It shows commuters rushing to work across Reuters Plaza in London, United Kingdom. Is there a better way to show the trade-off between working hours and free time?


← See how Unit 2 is changing See how Unit 4 is changing →