today’s warm up
DESCRIPTION
Today’s Warm Up. Pick up and complete the questionnaire at the front of the room – “Do You Think Like an Economist?”. Basic Economic Concepts. Today’s LEQ : Why should we care about economics?. What is Economics?. The science of scarcity - unlimited wants, limited resources - PowerPoint PPT PresentationTRANSCRIPT
Today’s Warm Up Pick up and complete the questionnaire
at the front of the room – “Do You Think Like an Economist?”
Basic Economic ConceptsToday’s LEQ: Why should we care about economics?
What is Economics?The science of scarcity -
unlimited wants, limited resourcesScarcity forces us to make
choices Economists study how individuals
and societies deal with scarcity
Comp. Check Which is more important to survival –
diamonds or water? Which is more expensive and why?
How much does a ticket cost for a regular season Phillies game? What about in 2008 when the Phillies made it to the World Series? In terms of scarcity, explain why the price increased.
Trade-OffsALL decisions involve
trade-offs – the alternatives we give up whenever we choose one course of action over others (There is no such thing as a free lunch!)
Opportunity cost – the most desirable alternative given up
i.e. sleep, study, fun example
Micro vs. MacroMICROeconomics – study of
small economic units such as ind’ls, firms, industries
MACROeconomics – Study of the LARGE economy as a whole or in its basic subdivisions (national economic growth, unemployment, etc.)
How is economics used? Theoretical Economics – scientific
method used to make generalizations & abstractions to develop theories
Policy Economics – theories applied to fix problems or meet economic goals
Positive vs. Normative: Positive Statements – based on facts.
Avoids value judgements (what is) Normative Statements – includes
value judgements (what ought to be)
Marginal Analysis In economics, marginal =
additional“Thinking on the margin” or
marginal analysis involves making decisions based on the additional benefit vs. the additional cost
In Summary: Five Key Economic Assumptions1. Society’s wants are unlimited, but ALL
resources are limited (scarcity).2. Due to scarcity, choices must be made. Every
choice has a cost (a trade-off).3. Everyone’s goal is to make choices that
maximize their satisfaction. Everyone acts in their own “self-interest.”
4. Everyone acts rationally by comparing the marginal costs and marginal benefits of every choice
5. Real-life situations can be explained and analyzed through simplified models and graphs.
Homework – Due by ThursdayRead Chapter 1 in the Mankiw
textAdd to your class notes as you
read.Complete the AP
Microeconomics Pre-Test (no stressing!)