Mr. Bernstein Module 1: The Study of Economics September 2017 AP Economics Mr. Bernstein Module 1: The Study of Economics September 2017

AP Economics Mr. Bernstein Resources are Scarce Land Labor Capital Entrepreneurship or Human Capital Scarcity implies choices must be made by individuals, corporations or societies Example: Building a dam…or fracking

AP Economics Mr. Bernstein Opportunity Cost The Real Cost of Something Is What You Must Give Up to Get It Example: Buy a new phone for $200, but now cannot buy new shoes. Can’t have both. Economic costs are $200 PLUS the enjoyment of wearing new shoes, which you now can’t do Opportunity costs are implicit, not explicit

AP Economics Mr. Bernstein The Difference between Micro and Macro Microeconomics focuses on choices made by individuals, households, or firms—the smaller parts that make up the economy as a whole. Macroeconomics focuses on economic aggregates—economic measures such as the unemployment rate, the inflation rate, and gross domestic product—that summarize data across many different markets. Macroeconomics focuses on the bigger picture.

AP Economics Mr. Bernstein Positive vs Normative Economics Positive economics: Analysis used to determine how the world works; no judgments applied…”what is” or “what will be” Normative economics: How the world should be; may involve value judgments on right and wrong Examples: “It is 80 degrees in here” vs. “It’s too hot in here”

AP Economics Mr. Bernstein When and Why Economists Disagree Economists may disagree because they have different values or opinions Economists may disagree because they use different models or methods to conduct their analysis Over time, disputes in economics are resolved by the accumulation of evidence (but this can sometimes take a long time!) Example: The debate over minimum wages