unit 1—introductory materials chapters 1-3 2 weeks

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Unit 1— Unit 1— Introductory Introductory Materials Materials Chapters 1-3 Chapters 1-3 2 weeks 2 weeks

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Page 1: Unit 1—Introductory Materials Chapters 1-3 2 weeks

Unit 1—Unit 1—IntroductoryIntroductoryMaterials Materials Chapters 1-3Chapters 1-3

2 weeks2 weeks

Page 2: Unit 1—Introductory Materials Chapters 1-3 2 weeks

The Nature and The Nature and Methods of Methods of EconomicsEconomicsChapter 1Chapter 1

Page 3: Unit 1—Introductory Materials Chapters 1-3 2 weeks

Economics:Economics:

Social science concerned with how Social science concerned with how people satisfy unlimited wants w/ limited people satisfy unlimited wants w/ limited resources.resources.

Page 4: Unit 1—Introductory Materials Chapters 1-3 2 weeks

Scarcity and choiceScarcity and choice

ScarcityScarcity requires that choices be made requires that choices be made There are always There are always trade-offstrade-offs when when

decisions are madedecisions are made The cost of any good, service or activity The cost of any good, service or activity

is the value of what must be given up to is the value of what must be given up to obtain it = obtain it = opportunity costopportunity cost

Page 5: Unit 1—Introductory Materials Chapters 1-3 2 weeks

Rational behaviorRational behavior

Rational self-interest entails making Rational self-interest entails making decisions to achieve maximum fulfillment decisions to achieve maximum fulfillment of goalsof goals

Different preferences lead to different Different preferences lead to different choiceschoices

Rational self-interest is not the same as Rational self-interest is not the same as selfishness—it guides the economyselfishness—it guides the economy

Page 6: Unit 1—Introductory Materials Chapters 1-3 2 weeks

Marginalism:Marginalism:

= extra, additional or a change in= extra, additional or a change in Each option considered weighs the marginal Each option considered weighs the marginal

benefit against the marginal costbenefit against the marginal cost Whether the decision is personal or one made Whether the decision is personal or one made

by business or gov’t, the principle is the sameby business or gov’t, the principle is the same The marginal cost should not exceed the The marginal cost should not exceed the

marginal benefitmarginal benefit mc < mbmc < mb

Page 7: Unit 1—Introductory Materials Chapters 1-3 2 weeks

Why study Economic?Why study Economic?

For citizenshipFor citizenship

--most political problems have an --most political problems have an economic aspecteconomic aspect

--voters and elected officials can fulfill --voters and elected officials can fulfill their role more effectively if they have an their role more effectively if they have an understanding of economic principlesunderstanding of economic principles

Page 8: Unit 1—Introductory Materials Chapters 1-3 2 weeks

Professional and personal applicationsProfessional and personal applications

--understand TINSTAAFL--understand TINSTAAFL

--develop analytical skills--develop analytical skills

--make intelligent decisions--make intelligent decisions

Page 9: Unit 1—Introductory Materials Chapters 1-3 2 weeks

Economic MethodologyEconomic Methodology

Scientific methodScientific method Theoretical economicsTheoretical economics TerminologyTerminology GeneralizationsGeneralizations Ceteris paribusCeteris paribus

--“other things equal” (one thing at a --“other things equal” (one thing at a time)time)

GraphsGraphs

Page 10: Unit 1—Introductory Materials Chapters 1-3 2 weeks

Our 8 economic GOALS Our 8 economic GOALS (page 9 in text)(page 9 in text)

Economic growthEconomic growth Full employmentFull employment Economic efficiencyEconomic efficiency Price level stabilityPrice level stability Economic freedomEconomic freedom Equitable distribution of incomeEquitable distribution of income Economic securityEconomic security Balance of tradeBalance of trade

Page 11: Unit 1—Introductory Materials Chapters 1-3 2 weeks

MacroeconomicsMacroeconomics

Examines the economy as a wholeExamines the economy as a whole Includes measures of total output, total Includes measures of total output, total

employment, total income, aggregate employment, total income, aggregate expenditures and general price levelexpenditures and general price level

Think of it as examining the forest—not Think of it as examining the forest—not the treesthe trees

Page 12: Unit 1—Introductory Materials Chapters 1-3 2 weeks

MicroeconomicsMicroeconomics

Looks at specific economic unitsLooks at specific economic units Concerned with the individual industry, Concerned with the individual industry,

firm or household and the price of firm or household and the price of specific products and resourcesspecific products and resources

Think of it as examining the trees, not the Think of it as examining the trees, not the forestforest

Page 13: Unit 1—Introductory Materials Chapters 1-3 2 weeks

Positive and Normative Positive and Normative EconomicsEconomics

PositivePositive = describes the economy as it = describes the economy as it actually is, avoiding value judgments and actually is, avoiding value judgments and attempting to establish scientific attempting to establish scientific statements and economic behaviorstatements and economic behavior

NormativeNormative = involves value judgments = involves value judgments about what the economy should be likeabout what the economy should be like --loaded terminology--loaded terminology --biases—preconceptions that are not based --biases—preconceptions that are not based

on factson facts