introduction. what is economics? it’s influence is all around us! it’s influence is all around...
TRANSCRIPT
IntroductionIntroduction
What is economics?What is economics?
It’s influence is all around us!It’s influence is all around us!
In our clothes!In our clothes!
In our workplace!In our workplace!
In our politics!In our politics!
What statements related to economics have you What statements related to economics have you heard recently?heard recently?
Economics is … Economics is …
Social ScienceSocial Science
Study of limited resources and Study of limited resources and unlimited wantsunlimited wants
Way of ThinkingWay of Thinking
What resources are limited?What resources are limited?
What resources are limited?What resources are limited?
MoneyMoney TimeTime Texans ticketsTexans tickets Concert ticketsConcert tickets Clean waterClean water
Economic Way of ThinkingEconomic Way of Thinking
Scarcity realityScarcity reality forces people, forces people, business, communities, business, communities, governments, and societies to governments, and societies to make choices.make choices.
Economics Way of ThinkingEconomics Way of Thinking
Do I go to bed or stay up and Do I go to bed or stay up and watch TV?watch TV?
Do I come to class or sleep in Do I come to class or sleep in late?late?
Do I spend $20 on a nice Do I spend $20 on a nice dinner or do I save the dinner or do I save the money?money?
Economics Way of ThinkingEconomics Way of Thinking
Every economic decision has Every economic decision has costs: money, time, effort, or a costs: money, time, effort, or a lost opportunity to do something lost opportunity to do something else.else.
We make choices that we We make choices that we believe are in our best interests believe are in our best interests by comparing what we gain to by comparing what we gain to what we must give up.what we must give up.
Economics Way of ThinkingEconomics Way of Thinking
Benefits of Benefits of attending to attending to collegecollege
Costs of Costs of attending to attending to collegecollege
Economics Way of ThinkingEconomics Way of Thinking
Benefits of Benefits of attending to attending to collegecollege
Costs of Costs of attending to attending to collegecollege
Economics Way of ThinkingEconomics Way of Thinking
Benefits of Benefits of attending to attending to collegecollege
Costs of Costs of attending to attending to collegecollege
Economics Way of ThinkingEconomics Way of Thinking
When I go to college, I trade…..When I go to college, I trade…..
Opportunity Cost is …Opportunity Cost is …
……what you must give up what you must give up when you make a choice.when you make a choice.
What is the opportunity cost of What is the opportunity cost of taking an art course instead of a taking an art course instead of a math course?math course?
What is the opportunity cost of What is the opportunity cost of downloading an album from iTunes downloading an album from iTunes for $9.99?for $9.99?
What is the opportunity cost of What is the opportunity cost of going out to the movies before a big going out to the movies before a big test?test?
Economics Way of ThinkingEconomics Way of Thinking
Measuring cost or benefit for Measuring cost or benefit for oneone additional unit additional unit Studying chemistry for Studying chemistry for oneone more more
hour and economics hour and economics oneone less hour less hour Attending college for Attending college for oneone more more
year instead of going to workyear instead of going to work
Economics Way of ThinkingEconomics Way of Thinking
Economics Way of ThinkingEconomics Way of Thinking
Incentives matter!Incentives matter!
You decide to buy your school You decide to buy your school supplies at Walmart instead of CVS supplies at Walmart instead of CVS because the cost is less.because the cost is less.
You decide to major in nursing You decide to major in nursing instead of teaching because there instead of teaching because there are more jobs in nursing.are more jobs in nursing.
Economic Principles of ChoiceEconomic Principles of Choice
1.1. Resources are scare.Resources are scare.
2.2. Opportunity cost is true cost.Opportunity cost is true cost.
3.3. ““How much” is a decision at How much” is a decision at the margin.the margin.
4.4. People respond to incentives People respond to incentives to make themselves better off.to make themselves better off.
A.A. You decide that four You decide that four classes are enough for classes are enough for this semester and decide this semester and decide against taking a fifth against taking a fifth class.class.
B.B. You decide to buy You decide to buy gasoline at the corner gasoline at the corner store because the price is store because the price is less than the station near less than the station near the school.the school.
C.C. The Houston city The Houston city manager has decided manager has decided that the million dollars will that the million dollars will be used to patch street be used to patch street “pot holes” instead of “pot holes” instead of building city sidewalks. building city sidewalks.
1.1. Resources are Resources are scare.scare.
2.2. Opportunity cost Opportunity cost is true cost.is true cost.
3.3. ““How much” is a How much” is a decision at the decision at the margin.margin.
4.4. People respond People respond to incentives.to incentives.
Examples of ChoiceExamples of Choice
Market EconomyMarket Economy
Interaction of choicesInteraction of choices
My choices affect your My choices affect your choices, and your choices choices, and your choices affect my choices.affect my choices.
Economic Principles of Economic Principles of InteractionInteraction5.5. There are gains from trade because of There are gains from trade because of
specialization.specialization.
6.6. Because people respond to incentives, Because people respond to incentives, markets move toward equilibrium.markets move toward equilibrium.
7.7. Resources should be used efficiently to Resources should be used efficiently to achieve society’s goals.achieve society’s goals.
8.8. Because people usually exploit gains Because people usually exploit gains from trade, markets usually lead to from trade, markets usually lead to efficiency.efficiency.
9.9. When markets don’t lead to efficiency, When markets don’t lead to efficiency, government intervention can improve government intervention can improve society’s welfare.society’s welfare.
Examples of InteractionExamples of InteractionA.A. At a college tutoring co-op, At a college tutoring co-op,
student can arrange to student can arrange to provide tutoring in subjects in provide tutoring in subjects in which they are good in return which they are good in return for receiving tutoring in for receiving tutoring in subjects they are poor in.subjects they are poor in.
B.B. The local municipality The local municipality imposes a law that requires imposes a law that requires bars and night clubs near bars and night clubs near residential areas to keep their residential areas to keep their noise levels below a certain noise levels below a certain level. level.
C.C. On the college website, books On the college website, books of a given title with of a given title with approximately the same level approximately the same level of wear and tear sell for about of wear and tear sell for about the same price.the same price.
D.D. To provide better care for low-To provide better care for low-income patients, the local income patients, the local municipality has decided to municipality has decided to close some underutilized close some underutilized neighborhood clinics and shift neighborhood clinics and shift funds to the main hospital.funds to the main hospital.
5.5. There are gains from There are gains from trade because of trade because of specialization.specialization.
6.6. Markets move toward Markets move toward equilibrium.equilibrium.
7.7. Resources should be Resources should be used efficiently to used efficiently to achieve society’s goals.achieve society’s goals.
8.8. Markets usually lead to Markets usually lead to efficiency.efficiency.
9.9. When markets don’t When markets don’t lead to efficiency, lead to efficiency, government intervention government intervention can improve society’s can improve society’s welfare.welfare.
Group WorkGroup Work
5.5. There are gains from trade.There are gains from trade.
6.6. Markets move toward equilibrium.Markets move toward equilibrium.
7.7. Resources should be used efficiently to Resources should be used efficiently to achieve society’s goals.achieve society’s goals.
8.8. Markets usually lead to efficiency.Markets usually lead to efficiency.
9.9. When markets don’t lead to efficiency, When markets don’t lead to efficiency, government intervention can improve government intervention can improve society’s welfare.society’s welfare.
Economic Principles of Economic Principles of Economy-Wide InteractionEconomy-Wide Interaction
10.10. One person’s spending is One person’s spending is another person’s income.another person’s income.
11.11. Overall spending sometimes Overall spending sometimes gets out of line with economy’s gets out of line with economy’s productive capacity.productive capacity.
12.12. Government policies can Government policies can change spending.change spending.
Examples of Economy-Wide Examples of Economy-Wide InteractionsInteractionsA.A. The White House urged The White House urged
Congress to pass a package Congress to pass a package of temporary spending of temporary spending increases and tax cuts in increases and tax cuts in early 2009, a time when early 2009, a time when employment was plunging employment was plunging and unemployment soaring.and unemployment soaring.
B.B. Oil companies are investing Oil companies are investing heavily in projects that will heavily in projects that will extract oil from the “oil extract oil from the “oil sands” of Canada. Near the sands” of Canada. Near the projects in Edmonton, projects in Edmonton, Alberta, restaurants and Alberta, restaurants and other consumer business other consumer business are booming.are booming.
C.C. In the mid-2000s, Spain, In the mid-2000s, Spain, which was experiencing a which was experiencing a big housing boom, also had big housing boom, also had the highest inflation rate in the highest inflation rate in Europe.Europe.
10.10. One person’s One person’s spending is spending is another person’s another person’s incomeincome
11.11. Overall spending Overall spending sometimes gets sometimes gets out of line with out of line with economy’s economy’s productive productive capacity.capacity.
12.12. Government Government policies can policies can change spending.change spending.
AssignmentAssignment
Read Chapter 1Read Chapter 1 Complete on paper to turn inComplete on paper to turn in
Page 23, Problem 1 Page 23, Problem 1 Page 24, Problems 8 and 11Page 24, Problems 8 and 11
Make a list of …Make a list of …
ThreeThree new vocabulary words new vocabulary words from today.from today.
TwoTwo things you remember things you remember from today.from today.
OneOne thing you would like to thing you would like to know more about.know more about.
CHOICECHOICE Resources are scare.Resources are scare. Opportunity cost is true cost.Opportunity cost is true cost. ““How much” is a marginal decision.How much” is a marginal decision. People respond to incentives.People respond to incentives.
INTERACTIONINTERACTION There are gains from trade.There are gains from trade. Markets move toward equilibrium.Markets move toward equilibrium. Resources should be used efficiently to achieve society’s Resources should be used efficiently to achieve society’s
goals.goals. Markets usually lead to efficiency.Markets usually lead to efficiency. When markets don’t lead to efficiency, government When markets don’t lead to efficiency, government
intervention can improve society’s welfare.intervention can improve society’s welfare. ECONOMY-WIDE INTERACTION ECONOMY-WIDE INTERACTION
One person’s spending is another person’s incomeOne person’s spending is another person’s income Overall spending sometimes gets out of line with economy’s Overall spending sometimes gets out of line with economy’s
productive capacity.productive capacity. Government policies can change spending.Government policies can change spending.
