Module 1 The Study of Economics Please take out paper and writing implement for your reading quiz…

R. Quiz What 2 things are central to economics? What is the real cost of a decision, a.k.a. the alternative given up? What is the difference between positive and normative statements? List 1 of 2 main reasons economists often disagree? What makes macroeconomics different from microeconomics? R. Quiz

Scarcity and Choice are central to economics because, since resources are limited this is the reason we have to make choices. Since money is limited we make choices about what we spend it on Since time is limited we have to make choices about what we do Individual Choice

The opportunity cost is important to decision making because it is the real cost, what is given up when one makes a choice. The opportunity cost of college (fees/potential income) The opportunity cost of going to the park on your Saturday afternoon (spending Saturday at the beach or studying) Opportunity Cost

Micro vs Macroeconomics Microeconomics focuses on the choices of individuals, households, and firms. Macroeconomics focuses on the overall ups and downs of the economy. Ex Micro: What determines the number of iphones exported to France. Ex Macro: What determines the overall trade in goods, services, and financial assets between the United States and the rest of the world. Micro vs Macroeconomics

Positive vs Normative Positive statements are those based upon fact. Explain the way things are Normative states are based on opinion. Explain the way things should be How much would that revenue increase if the toll were raised from $1.00 to $1.50? Should the toll be raised, bearing in mind the roll increase would likely reduce traffic and pollution but impose some financial hardship on frequent commuters? Positive vs Normative

Why Economists Disagree Differences in values. Differences in models of analysis or assumptions Why Economists Disagree

Case Study in the Economics of Dating

AP Econ Calendar