1 Economic Markets and Market Imperfections

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Before you begin this course, make sure you have completed the Course Orientation (see the Start Here! menu at left).

Overview of Lesson 1

Did you ever wonder how we make choices?  How do people decide to split their time between work and play?  How do companies decide to split their expenditures between workers and equipment?  How do advocacy groups decide what to be an advocate for?  And how do these decisions result in the diversity of activity we see around us every day?

When the topic is energy, all of these individual choices come together to create the complex and interconnected systems we refer to as global energy enterprise.  In order to understand the big questions related to global energy eneterprise, we need a shared framework for thinking about choices.  Economics provides such a framework. In this lesson, we will review the workings of a conventional economic model and consider the imperfections, or limits, of this model that create opportunity for nonmarket activities. We will begin to apply this theory to energy-related issues and data.

What will we learn?

By the end of this lesson, you should be able to... 

• describe the welfare properties of a conventional economic model;
• list and describe the one critical assumption in the conventional economic model that gives rise to the conventional economic model's welfare properties;
• explain and demonstrate, with examples, the three implications of this assumption;
• explore rational decision making that involves mulit-dimensional objectives (materialistic and principled);
• provide and explain projections for global energy demand and sources.

What is due for Lesson 1?

The table below provides an overview of the requirements for Lesson 1. For details, please see individual assignments.

Please refer to the Calendar in Canvas for specific time frames and due dates.