1. Introduction to Economics @ EFA 3 Introduction/Review Principles of Economics, Microeconomics Welcome Prof. Dr. Peter Schmidt

2. WHY study Economics ? What‘s it about ? What do you know? What do you expect?

3. Environment Business

4. Introductions... u Economics u Lecturer u Students

5. Module Description: Learning Outcomes

6. Module Description: Contents

7. Economics & Statistics ZEW Zentrum für Europäische Wirtschaftsforschung - Mannheim Peter Schmidt Who am I market. research. culture

8. You u are highly motivated students u have to carry your individual workload:

9. schmidt-bremen.de

10. Aulis group

11. (10) Principles of Economics

12. Every field of study has its own terminology Mathematics axioms integrals vector spaces Psychology ego id cognitive dissonance Law torts venues Promissory estoppel

13. Every field of study has its own terminology Economics Supply Demand Elasticity Consumer Surplus Comparative advantage Opportunity cost Deadweight loss

14. Economics trains you to.... uThink in terms of alternatives. uEvaluate the cost of individual and social choices. uExamine and understand how certain events and issues are related.

15. The Economist as a Scientist The economic way of thinking... uInvolves thinking analytically and objectively. uMakes use of the scientific method.

16. The Scientific Method uUses abstract models to help explain how a complex, real world operates. uDevelops theories, collects, and analyzes data to prove (or dismiss) the theories. Observation, Theory and More Observation!

17. 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 32887-6777.

18. A household and an economy face many decisions: uWho will work? uWhat goods and how many of them should be produced? uWhat resources should be used in production? uAt what price should the goods be sold?

19. Society and Scarce Resources: The management of society’s resources is important because resources are scarce.

20. Scarcity...... means that society has limited resources and therefore cannot produce all the goods and services people wish to have.

21. Economics Economics is the study of how society manages its scarce resources.

22. 1. People face tradeoffs. “There is no such thing as a free lunch!”

23. Economists study... uI How people make decisions. (principle 1-4) uHow people interact with each other. (principle 5-7) uThe forces and trends that affect the economy as a whole. (principle 8-10)

24. Ten Principles of Economics 1.People face tradeoffs. 2.The cost of something is what you give up to get it. 3.Rational people think at the margin. 4.People respond to incentives. I How People Make Decisions

25. 5.Trade can make everyone better off. 6.Markets are usually a good way to organize economic activity. 7.Governments can sometimes improve economic outcomes. II How People Interact Ten Principles of Economics

26. 8.The standard of living depends on a country’s production. 9.Prices rise when the government prints too much money. 10.Society faces a short-run tradeoff between inflation and unemployment. III How the Economy as a Whole Works