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Prof. Dr. Peter Schmidt together with Prof. Luther Lawson Ph.D.
Welcome to Economics @ ISTM Prof. Dr. Peter Schmidt together with Prof. Luther Lawson Ph.D. Introduction to the Principles of Economics, Micro- / Macroeconomics, International Economics
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What‘s it about ? What do you know? What do you expect?
WHY study Economics ? What‘s it about ? What do you know? What do you expect?
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Business Environment
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Introductions . . . Economics Lecturer Students
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Who am I Peter Schmidt Economics & Statistics
ZEW Zentrum für Europäische Wirtschaftsforschung - Mannheim market . research . culture 1 1
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schmidt-bremen.de
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You are highly motivated students
have to carry your individual workload:
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Aulis group
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Time Schedule . . . Introduction week 1-3 Schmidt “Micro +” week 4-6 Lawson Macro & International week 7~13 Schmidt
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(10) Principles of Economics
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Every field of study has its own terminology
Mathematics axioms integrals vector spaces Psychology ego id cognitive dissonance Law torts venues Promissory estoppel
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Every field of study has its own terminology
Economics Opportunity cost Elasticity Supply Consumer Surplus Comparative advantage Deadweight loss Demand
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Economics trains you to. . . .
Think in terms of alternatives. Evaluate the cost of individual and social choices. Examine and understand how certain events and issues are related. 2
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The Economist as a Scientist
The economic way of thinking . . . Involves thinking analytically and objectively. Makes use of the scientific method. 3
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Observation, Theory and More Observation!
The Scientific Method Uses abstract models to help explain how a complex, real world operates. Develops theories, collects, and analyzes data to prove (or dismiss) the theories. Observation, Theory and More Observation! 4
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Ten Principles of Economics
Chapter 1 Copyright © 2001 by Harcourt, Inc. All rights reserved. Requests for permission to make copies of any part of the work should be mailed to: Permissions Department, Harcourt College Publishers, 6277 Sea Harbor Drive, Orlando, Florida
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A household and an economy face many decisions:
Who will work? What goods and how many of them should be produced? What resources should be used in production? At what price should the goods be sold?
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Society and Scarce Resources:
The management of society’s resources is important because resources are scarce.
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Scarcity . . . . . . means that society has limited resources and therefore cannot produce all the goods and services people wish to have.
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Economics is the study of how society manages its scarce resources.
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Economists study. . . I How people make decisions. (principle 1-4)
How people interact with each other. (principle 5-7) The forces and trends that affect the economy as a whole. (principle 8-10)
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Ten Principles of Economics
I How People Make Decisions People face tradeoffs. The cost of something is what you give up to get it. Rational people think at the margin. People respond to incentives. 7
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Ten Principles of Economics
II How People Interact Trade can make everyone better off. Markets are usually a good way to organize economic activity. Governments can sometimes improve economic outcomes. 7
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Ten Principles of Economics
III How the Economy as a Whole Works The standard of living depends on a country’s production. Prices rise when the government prints too much money. Society faces a short-run tradeoff between inflation and unemployment. 7
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