1. Introducing Economics

2. Introducing Economics
What do Economists Study?

3. WHAT DO ECONOMISTS STUDY?
Economic problems
production and consumption
Scarcity: the central economic problem
defining scarcity
use of resources (factors of production)
land/natural resources
labour
capital
enterprise 2

4. WHAT DO ECONOMISTS STUDY?
Macroeconomic issues
economic growth
unemployment
inflation
balance of payments problems
cyclical fluctuations 3

5. WHAT DO ECONOMISTS STUDY?
Microeconomic issues
choices: what, how and for whom?
the concept of opportunity cost
rational economic decision making
marginal costs and marginal benefits
microeconomic objectives
efficiency
equity 3

6. WHAT DO ECONOMISTS STUDY?
The production possibility curve
what the curve shows 4

7. A production possibility curve
Units of food Units of clothing
(millions) (millions) 8m
7m m
6m m
5m m
4m m
3m m
2m m
1m m m
Units of food (millions)
Units of clothing (millions)

8. A production possibility curve
Units of food Units of clothing
(millions) (millions)
a m
7m m
6m m
5m m
4m m
3m m
2m m
1m m m
Units of food (millions)
Units of clothing (millions)

9. A production possibility curve
Units of food Units of clothing
(millions) (millions) 8m
b m m
6m m
5m m
4m m
3m m
2m m
1m m m
Units of food (millions)
Units of clothing (millions)

10. A production possibility curve
Units of food Units of clothing
(millions) (millions) 8m
7m m
c m m
5m m
4m m
3m m
2m m
1m m m
Units of food (millions)
Units of clothing (millions)

11. A production possibility curve
Units of food Units of clothing
(millions) (millions) 8m
7m m
6m m
5m m
4m m
3m m
2m m
1m m m
Units of food (millions)
Units of clothing (millions)

12. A production possibility curve
Units of food (millions)
Units of clothing (millions)

13. A production possibility curvew x
Units of food (millions)
Units of clothing (millions)

14. WHAT DO ECONOMISTS STUDY?
The production possibility curve
what the curve shows
microeconomics and the production possibility curve: 4

15. WHAT DO ECONOMISTS STUDY?
The production possibility curve
what the curve shows
microeconomics and the production possibility curve:
choices and opportunity cost 4

16. Opportunity cost x y 1 Units of food (millions) 1
Units of clothing (millions)

17. WHAT DO ECONOMISTS STUDY?
The production possibility curve
what the curve shows
microeconomics and the production possibility curve:
choices and opportunity cost
increasing opportunity cost 4

18. Increasing opportunity costsx 1 y 1 2
Units of food (millions) z 1
Units of clothing (millions)