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Introduction to AP Economics
Welcome!
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ECONOMICS
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The World & Resources People +
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Why do we need Economics?
Resources are SCARCE People have Unlimited Wants & Needs FORCES: 3) Society to allocate resources
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Exact Sciences Social Science
versus Social Science Fact based Proofs often used: 2 + 2 = 4 Theory based Difficult to prove Based on human behavior Examples: Psychology Economics History Examples: Physics Chemistry Mathematics Social sciences are academic disciplines which study the social life of human groups & individuals Examples: anthropology, economics, geography, history, political science, psychology & sociology
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Formal Definition of Economics
The social science of how society allocates scarce resources among unlimited wants and needs.
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Economic Systems All economic systems allocate scarce resources
Society must choose both a political & economic system
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3 Types of Economic Systems
MARKET COMMAND TRADITIONAL
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What is a Millennial? Generation Y born between 1982-1997
Oldest about 35 years old
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End of Day 1
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Economics is the social science of how a society allocates their scarce resources among unlimited wants and needs. Air versus Oil
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There is NO Free Lunch Nothing is free in economics
People face Trade-offs in all decision making Decisions have both: -Opportunity Costs & Opportunity Benefits -Short Run and Long Run implications
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2 Types of Costs:
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Marginal Analysis Decisions are rarely “all or nothing”
Most decisions are made at the Margin margin = next unit (consumed or produced) You first decide to study. => Marginal decision = how long to study? You buy popcorn at a movie => Marginal decision = what size to buy? Marginal Benefit (MB) vs. Marginal Cost (MC) Value of next unit consumed Cost of next unit produced In economics, when the MB ≥ MC then “do it”
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Marginal Benefit Worksheet
MB MC Total Earnings Total Cost High School $800,000 $0 Associate $1,200,000 $25,000 Bachelor’s $2,000,000 $100,000 Master’s $2,100,000 $200,000 Doctorate $2,500,000 $2,500,000
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Should I go to college? Opportunity Benefit Opportunity Cost
Worksheet #1 Trade-off Analysis Should I go to college? Opportunity Benefit Opportunity Cost Explicit Cost? Implicit Cost? Long Run? Short Run?
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Should the Gov’t Subsidize Electric Cars?
Benefits Costs
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End of 2nd Day Please read your textbook!
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