the first lesson of economics is scarcity: there is never enough of anything to fully satisfy all...
TRANSCRIPT
The first lesson of economics is scarcity:
there is never enough of anything to fully satisfy all
those who want it. The first lesson of politics is to disregard the first lesson
of economics. -Thomas Sowell
Economic Basic TermsModules 1-3
AP Microeconomics
“Then you should say what you mean,” the March Hare went on.“I do,” Alice hastily replied; “at least I mean what I say – that’s the same thing you know.”“Not the same thing a bit!” said the Hatter.“Why, you might just as well say that ‘I see what I eat’ is the same thing as ‘I eat what I see!’”
- Lewis Carroll, Alice in Wonderland, 1865
Basics… misc. terms• Goods & Services• Inputs and Outputs• Stock and Flow
Basics 1: The study of…
• Economics–Micro versus Macro
• Theories & Models– Scientific Method– Economic Principle (predicts probable
behavior)–Ceteris paribus
• Positive versus Normative
Basics 2: Limits & Alternatives
• Scarcity• Opportunity Cost• Utility• Incentive• Marginal Analysis– MB– MC– Rational Choice
• Three Economic Questions:1.What2.How3.For Whom
Basics 3: Factors of Production & WIRP
• Factors of Production–Labor, Capital, Land, Entrepreneurship
• WIRP (factor payments)–Wages, Interest, Rent, Profit
Basics 4: Macro basics
• Circular Flow• Business Cycle• Unemployment, GDP, and Inflation• Standard of Living• Economic Growth