miller micro ppt 01
Post on 07-Apr-2018
225 Views
Preview:
TRANSCRIPT
-
8/6/2019 Miller Micro Ppt 01
1/21
economics today the micro view
Chapter 1Chapter 1
The Nature ofThe Nature ofEconomicsEconomics
Copyright 2009 Pearson Education Canada
-
8/6/2019 Miller Micro Ppt 01
2/21
Copyright 2009 Pearson Education Canada 1-2
Learning ObjectivesLearning Objectives
1.1 Explain the meaning of scarcity.
1.2 Define economics and distinguishbetween microeconomics andmacroeconomics.
1.3 Describe how resource use
decisions are affected by therationality assumption, costs andbenefits at the margin, andincentives.
-
8/6/2019 Miller Micro Ppt 01
3/21
-
8/6/2019 Miller Micro Ppt 01
4/21
Copyright 2009 Pearson Education Canada 1-4
ScarcityScarcity
Scarcity
The condition that arises because wantsalways exceed what can be produced OROBTAINED with limited resources.
-
8/6/2019 Miller Micro Ppt 01
5/21
Copyright 2009 Pearson Education Canada 1-5
ScarcityScarcity
Wants
The goods and services that we desire to
consume as well as the goals that we
desire to achieve.
Resources
Include inputs used to produce the thingsthat we want to consume.
Money is also a resource that suffers from
scarcity
-
8/6/2019 Miller Micro Ppt 01
6/21
-
8/6/2019 Miller Micro Ppt 01
7/21
Copyright 2009 Pearson Education Canada 1-7
ScarcityScarcity
Production
Any activity converts resources into goodsand services.
-
8/6/2019 Miller Micro Ppt 01
8/21
-
8/6/2019 Miller Micro Ppt 01
9/21
Copyright 2009 Pearson Education Canada 1-9
Defining EconomicsDefining Economics
Microeconomics
The study of decision-making undertakenby individuals (or households) and byfirms.
Individual markets (industries)
Wages
Prices
-
8/6/2019 Miller Micro Ppt 01
10/21
Copyright 2009 Pearson Education Canada 1-10
Macroeconomics
Studies the behaviour of the economy as a
whole.
The big picture
Inflation
National Income or Expenditures (GDP)
Unemployment International trade
Defining EconomicsDefining Economics
-
8/6/2019 Miller Micro Ppt 01
11/21
Copyright 2009 Pearson Education Canada 1-11
Rational Decision MakingRational Decision Making
Rationality Assumption
An individual makes decisions based onmaximizing his or her own self-interest.
An individual does not intentionally makedecisions that would leave them worse off.
-
8/6/2019 Miller Micro Ppt 01
12/21
Copyright 2009 Pearson Education Canada 1-12
Rational Decision MakingRational Decision Making
Opportunity Cost
The value of the best alternative that mustbe sacrificed when a choice is made.
Pizzas and beer
Home-brewed coffee versus Starbucks
Lamborghini versus Honda Fit
-
8/6/2019 Miller Micro Ppt 01
13/21
-
8/6/2019 Miller Micro Ppt 01
14/21
Copyright 2009 Pearson Education Canada 1-14
Rational Decision MakingRational Decision Making
Individuals respond to incentives.
An Incentive is an inducement to take aparticular action. Think of SALE-priced
items!
Self-interest is not always measured in
terms of dollars and cents.
-
8/6/2019 Miller Micro Ppt 01
15/21
Copyright 2009 Pearson Education Canada 1-15
The Scientific MethodThe Scientific Method
Models orTheories
Simplified representations of the real worldused as the basis for predictions orexplanations.
A map and a set of directions are examples ofmodels.
-
8/6/2019 Miller Micro Ppt 01
16/21
Copyright 2009 Pearson Education Canada 1-16
The Scientific MethodThe Scientific Method
Assumptions
The Ceteris Paribus Assumption(CET-ter-us PAR-uh-bus)
Nothing changes except the factor or factorsbeing studied.
Example
What will happen to sales of compact discs if
their price falls to $5.00?
-
8/6/2019 Miller Micro Ppt 01
17/21
Copyright 2009 Pearson Education Canada 1-17
The Scientific MethodThe Scientific Method
Economics is an empirical science.
Real-world data is used to evaluate theusefulness of a model.
Economic models predict how people act,not how they think.
-
8/6/2019 Miller Micro Ppt 01
18/21
Copyright 2009 Pearson Education Canada 1-18
The Scientific MethodThe Scientific Method
An Economic Model of Crime Based on rationality assumption
Decisions to engage in crime based on
comparison of marginal benefits and costs Marginal benefits extra monies, thrill of
danger
Marginal costs equipment (guns),expected punishment costs, opportunitycosts
-
8/6/2019 Miller Micro Ppt 01
19/21
Copyright 2009 Pearson Education Canada 1-19
Positive VersusPositive Versus
Normative EconomicsNormative EconomicsPositive Economics
Statements that can be tested by observing
the facts.
Statement about what is
Normative Economics
Statement based on value judgments. Statement about what ought to be
-
8/6/2019 Miller Micro Ppt 01
20/21
Copyright 2009 Pearson Education Canada 1-20
Economic Policy andEconomic Policy and
Socioeconomic GoalsSocioeconomic GoalsEconomic Policies (macroeconomic)
Action plans designed to achieve commonly
accepted socioeconomic goals.
Goals include:
Full employment, Efficiency, Economicgrowth, Price stability, Equity (Fairness)
-
8/6/2019 Miller Micro Ppt 01
21/21
Copyright 2009 Pearson Education Canada 1-21
Economic Policy andEconomic Policy and
Socioeconomic GoalsSocioeconomic GoalsEconomic Theory Provides a role in understanding how
existing and proposed policies relate to
goals.
Example
Economic model of crime (theory)
suggests that CETERIS PARIBUS a policyof increasing the level of punishment(fines) will decrease the crime rate (goal).
top related