Learning ObjectivesLearning Objectives  LO1: Define economics, microeconomics, and macroeconomics.  LO2: Identify John Maynard Keynes, Alfred Marshall, and Adam Smith, and their influence in economics.  LO3: State and explain the problem of scarcity and its relation to opportunity cost.  LO4: Explain how a rational decision maker applies the cost–benefit principle.  LO5: State how three pitfalls can undermine rational economic decisions.  LO6: Explain how data are used to evaluate economic theories.  LO7: Distinguish positive economics from welfare economics.  LO8: Define an economic naturalist. © 2012 McGraw-Hill Ryerson Limited Ch1 -1

LO2: Identify John Maynard Keynes, Alfred Marshall, and Adam Smith, and their influence in economics  Adam Smith (1723–1790) Scottish economist who wrote The Wealth of Nations (1776), probably the most influential economics book ever written.  Adam Smith famously declared that, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” © 2012 McGraw-Hill Ryerson Limited Ch1 -2 LO2: Pioneers of Economics

LO2: Identify John Maynard Keynes, Alfred Marshall, and Adam Smith, and their influence in economics  Alfred Marshall (1842–1924) an economist of the nineteenth and early twentieth centuries who published Principles of Economics (1890) and whose influence on economics continues to this day.  He contributed to the spread of neoclassical microeconomics. © 2012 McGraw-Hill Ryerson Limited Ch1 -3 LO2: Pioneers of Economics

LO2: Identify John Maynard Keynes, Alfred Marshall, and Adam Smith, and their influence in economics  John Maynard Keynes (1883–1946) is a British economist whose The General Theory of Employment, Interest and Money (1936) provided a new framework for thinking about the Great Depression of the 1930s.  During the 1930s, previously accepted theories could not satisfactorily explain why many of the leading capitalist economies failed to recover from depressed output and high unemployment. © 2012 McGraw-Hill Ryerson Limited Ch1 -4 LO2: Pioneers of Economics