1. Macro Chapter 1- Limits, Alternatives and Choices
Presentation 1

2. Text Website

3. Activity 1 Your first assignment:
Independently, on a sheet of paper, If you had $1 billion, what would you do with it? Be as specific as possible.

4. Scarcity (Scarce Resources)
limited amount of resources that are never sufficient to satisfy people’s virtually unlimited economic wants
Limited resources, unlimited wants

5. Economics
Social science concerned with how individuals, institutions and society make optimal choices under conditions of scarcity

6. Opportunity Cost
For every decision, society or individuals must forgo the opportunity of getting the next best alternative
Ex- studying for a test rather than going to the movies or a concert
***No such things as a free lunch

7. Utility
The pleasure, happiness or satisfaction obtained from consuming a good or service
Measured by the imaginary unit of “utils”
***economists assume that people act rationally when making decisions in order to maximize utility

8. In economics, this means “extra”, “additional” or “change in”
Marginal
In economics, this means “extra”, “additional” or “change in”

9. Aggregate
A collection of specific economic units treated as if they were one unit
Ex- lump together the millions of consumers in the US and treat them as if they were one huge unit called “consumers”

10. Marginal Analysis
Comparison of marginal benefits and marginal costs in order to make decisions
Ex- Should you attend college? Should a business expand production? Should the government increase its defense program?
Continue until MB = MC

11. Ceteris Paribus “Other things equal assumption”
Economists assume that all variables except those being examined are held constant for a particular analysis

12. Macroeconomics
The part of economics concerned with the economy as a whole or its basic subdivisions or aggregates (government, global economy)
The big picture

13. Microeconomics
The part of economics concerned with decision making by individual units such as households, a firm, or an industry