1. DEFINING ECONOMICS Learning Objectives 1.Define economics. 2.Explain the concepts of scarcity and opportunity cost and how they relate to the definition.

Slides:



Advertisements
Similar presentations
1 Chapter 1 Introducing the Economic Way of Thinking Key Concepts Summary Practice Quiz Internet Exercises Internet Exercises ©2002 South-Western College.
Advertisements

1 Ch 1: What Economics Is About James R. Russell, Ph.D., Professor of Economics & Management, Oral Roberts University ©2005 Thomson Business & Professional.
1 Microeconomics Lecture 1 Institute of Economic Theories - University of Miskolc Mónika Kis-Orloczki Assistant lecturer
When you have completed your study of this chapter, you will be able to C H A P T E R C H E C K L I S T Define economics, distinguish between micro- economics.
Ten Principles of Economics
Chapter 1 Introducing the Economic Way of Thinking
1 Introducing the Economic Way of Thinking Key Concepts Summary ©2005 South-Western College Publishing.
PART 1 INTRODUCTION Getting Started CHAPTER 1 C H A P T E R C H E C K L I S T When you have completed your study of this chapter, you will be able to.
Ch. 1: What is Economics? Objectives
Give me two examples of trade- offs you made yesterday.
Ch. 1: What is Economics? Objectives
Eco 101: Chapter 1 notes.
Chapter 1 Introducing the Economic Way of Thinking
Lecture 2: ECN 111 The Basics
Ch. 1: What is Economics? Objectives
Introduction to Agricultural Economics
1 Ten Principles of Economics. TEN PRINCIPLES OF ECONOMICS Economics is the study of how society manages its scarce resources.
Learning ObjectivesLearning Objectives  LO1: Define economics, microeconomics, and macroeconomics.  LO2: Identify John Maynard Keynes, Alfred Marshall,
Macro Chapter 1- Limits, Alternatives and Choices
1 Some more intro material Here we have some more basic concepts that we see in the study of economics.
What can you do to help yourself in this class? 1.Come to every class! 2.Bring your workbook to class every day and use it effectively 3.Your number one.
Introduction to Economics
Homework – Day 1 Read all of Chapter 1. As you read, answer the following questions. 1. Define economics. 2. Explain the “economic way of thinking,” including.
WHAT IS ECONOMICS? 1 CHAPTER © 2003 Pearson Education Canada Inc.1-1.
Chapter 1 Preliminaries Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent.
Economics Chapters 1&2 What is Economics?.
Introduction to Economics
McGraw-Hill/Irwin Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved.
Chapter 1 Economics the Study of Choice Hossain: MSMC.
Economics as Social Science Economic Methodology Lecture 2 Dominika Milczarek-Andrzejewska.
Chapter 1 – The Study of Choice Read pages 1-16 I – What is Economics? A) Scarcity, Choice and Cost 1) Economics is a social science that examines how.
Economics 201: Basic Economic Analysis Introduction to the Course.
Homework – Day 1 Read p in Chapter 1. As you read, answer the following questions. 1. Define economics. 2. Identify and explain the three elements.
WHAT IS ECONOMICS? 1 CHAPTER. Objectives After studying this chapter, you will be able to:  Define economics and distinguish between microeconomics and.
WHY DO WE STUDY ECONOMICS??. WHY STUDY ECONOMICS Among TOP TEN REASONS ….. Economists can supply it on demand. You can talk about money without ever having.
Introduction to Economics. Outline I. What is Economics A. Formal Definition B. Informal Definition.
Economics A social science that examines how people choose among the alternatives available to them Scarcity: When not enough is available for free to.
The Nature and Method of Economics Chapter 1. The Economic Perspective Economics has a number of key concepts: –Scarcity and choice –Rational behavior.
Ch. 1: What is Economics?  Objectives Define economics and distinguish between microeconomics and macroeconomics Explain the big questions of economics.
Introduction to Economics Eco-101 Lecture # 01 Introduction to Economics and its important Aspects Instructor: Farhat Rashid.
Tutorial 1 Introduction to Economics 1. LEARNING OUTCOMES The term “economy” 2. Difference between microeconomics and macroeconomics; 3.The three basic.
1 Chapter 1 The Economic Approach. 2 Overview Basic terms and definitions Basic terms and definitions Eight guideposts to economic thinking Eight guideposts.
Nature and Methods of Economics: The Study of Economics Fall 2013.
Roadmap for Economics. What is Economics? The Social Science concerned with the efficient use of limited or scarce resources to achieve maximum satisfaction.
1 Introducing the Economic Way of Thinking Economics for Today by Irvin Tucker, 6 th edition ©2009 South-Western College Publishing.
The Nature and Method of Economics 1 C H A P T E R.
WHAT IS ECONOMICS? 1 CHAPTER. Objectives After studying this chapter, you will be able to:  Define economics and distinguish between microeconomics and.
CHAPTER 1 What is Economics?
Chapter 1: The Basics of Economics
Limits, Alternatives and Choices Economics is about wants and means. Society has the resources to make goods and services that satisfy our many desires.
1.1 Unit content Six topics: Economics as a social science Positive and normative economic statements The economic problem Production.
Economics: The World Around You
Introduction to Economics. Outline I. What is Economics A. Formal Definition B. Informal Definition.
Thinking Economically Ch. 1, pg An Economic Conundrum…  There are 100 hungry people  There are 100 hamburgers  What do we do with the 100 hamburgers?
1 The Scope and Method of Economics Chapter 1. 2 THE SCOPE AND METHOD OF ECONOMICS economics The study of how individuals and societies choose to use.
Canadian Economy 2203 Unit 1. What do you need to know? Define economics. Define economics. Describe what economists do and career options Describe what.
Miscellaneous. 600 What is the difference between a good and a service?
What is an economic model ? It is a simplified version of economic reality. Models “abstract” from many features of the real world. We do this to avoid.
Chapter 1: Limits, Alternatives, and Choices McGraw-Hill/IrwinCopyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin Copyright  2006 by The McGraw-Hill Companies, Inc. All rights reserved. ECONOMICS AND ECONOMIC REASONING Chapter 1.
Chapter 1 Limits, Alternatives, & Choices
Chapter 1 Limits, Alternatives, & Choices
Introduction to Economics
Introduction to Economics
251FINA Chapter One Dr. Heitham Al-Hajieh
The Fundamentals of Economics
Understanding Economics
Introduction to Economics
AP Economics “Econ, Econ” Econ.
1 Limits, Alternatives, and Choices
Presentation transcript:

1. DEFINING ECONOMICS Learning Objectives 1.Define economics. 2.Explain the concepts of scarcity and opportunity cost and how they relate to the definition of economics. 3.Understand the three fundamental economic questions: What should be produced? How should goods and services be produced? For whom should goods and services be produced?

1.1 Scarcity, Choice, and Cost Economics is a social science that examines how people choose among the alternatives available to them. Scarcity is the condition of having to choose among alternatives. A scarce good is a good for which the choice of one alternative requires that another be given up. A free good is a good for which the choice of one use does not require that another be given up. –e.g. when you use gravity it does not prevent your neighbor from using gravity.

Scarcity and the Fundamental Economic Questions What should be produced? How should goods and services be produced? For Whom should goods and services be produced? Opportunity cost is the value of the best alternative forgone in making any choice. –e.g. If you were not in college you could have spent the money for tuition, fees, and books on other things. Additionally, you could have used your time spent studying and attending class on other things.

2. DEFINING ECONOMICS Learning Objectives 1.Explain the distinguishing characteristics of the economic way of thinking. 2.Distinguish between microeconomics and macroeconomics

2.1 The Economic Way of Thinking A choice at the margin is a decision to do a little more or a little less of something. The Margin is the current level of an activity. e.g. suppose I run a t-shirt shop. I currently produce 500/month and it costs me $700 in machinery, labor, and materials to do so. If I produce 600/month next month and my costs increase to $750 then, given I am initially producing 500/month, the marginal cost of the next 100 shirts is $50.

2.2 Microeconomics and Macroeconomics Microeconomics is the branch of economics that focuses on the choices made by consumers and firms and the impacts those choices have on individual markets. Macroeconomics is the branch of economics that focuses on the impact of choices on the total, or aggregate, level of economic activity.

2.3 Putting Economics to Work Economics majors typically have a wide range of employment opportunities. Careers ‒ Economists work in government, for businesses, and in colleges and universities. Applying economics to other fields ‒ When taking LSAT exams, economics majors on average are among the highest ranking students. ‒ Average salary offers for economics majors are also among the highest across the disciplines.

3. THE ECONOMISTS’ TOOL KIT Learning Objectives 1.Explain how economists test hypotheses, develop economic theories, and use models in their analyses. 2.Explain how the all-other-things unchanged (ceteris paribus) problem and the fallacy of false cause affect the testing of economic hypotheses and how economists try to overcome these problems. 3.Distinguish between normative and positive statements.

3. THE ECONOMISTS’ TOOL KIT A variable is something whose value can change. A constant is something whose value does not change. The scientific method is a systematic set of procedures through which knowledge is created. A hypothesis is an assertion of a relationship between two or more variables that could be proven to be false.

3. THE ECONOMISTS’ TOOL KIT A theory is a hypothesis that has not been rejected after widespread testing and that wins general acceptance. A law is a theory that has been subjected to even more testing and that has won virtually universal acceptance.

3.1 Models in Economics A model is a set of simplifying assumptions about some aspect of the real world. –Economic models describe relationships among economic variables (price and quantity of a good for example). They help us understand the economy and help us generate hypotheses about the economy.

3.2 Testing Hypotheses in Economics When making a hypothesis economists assume other factors are held constant. Ceteris paribus is a Latin phrase that means, “all things being equal.” Hypotheses in economics typically specify a relationship in which a change in one variable causes another to change. A dependent variable is a variable that responds to a change while an independent variable is a variable that induces a change.

3.2 Testing Hypotheses in Economics A positive statement is a statement of fact or a hypotheses. A normative statement is a statement that makes a value judgment.