Principles of Economics

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Principles of Economics

Содержание

2. Ten Principles of Economics Chapter 1 Copyright © 2001 by Harcourt, Inc. All rights reserved. Requests
3. Economy. . . . . . The word economy comes from a Greek word for “one
4. A household and an economy face many decisions: Who will work? What goods and how many
5. Society and Scarce Resources: The management of society’s resources is important because resources are scarce.
6. Scarcity . . . . . . means that society has limited resources and therefore cannot
7. Economics Economics is the study of how society manages its scarce resources.
8. Economists study. . . How people make decisions. How people interact with each other. The forces
9. Ten Principles of Economics People face tradeoffs. The cost of something is what you give up
10. Ten Principles of Economics Trade can make everyone better off. Markets are usually a good way
11. Ten Principles of Economics The standard of living depends on a country’s production. Prices rise when
12. 1. People face tradeoffs. “There is no such thing as a free lunch!”
13. 1. People face tradeoffs. To get one thing, we usually have to give up another thing.
14. 1. People face tradeoffs. Efficiency means society gets the most that it can from its scarce
15. 2. The cost of something is what you give up to get it. Decisions require comparing
16. 2. The cost of something is what you give up to get it. The opportunity cost
17. 3. Rational people think at the margin. Marginal changes are small, incremental adjustments to an existing
18. 4. People respond to incentives. Marginal changes in costs or benefits motivate people to respond. The
19. LA Laker basketball star Kobe Bryant chose to skip college and go straight to the NBA
20. 5. Trade can make everyone better off. People gain from their ability to trade with one
21. 6. Markets are usually a good way to organize economic activity. In a market economy, households
22. 6. Markets are usually a good way to organize economic activity. Adam Smith made the observation
23. 6. Markets are usually a good way to organize economic activity. Because households and firms look
24. 7. Governments can sometimes improve market outcomes. When the market fails (breaks down) government can intervene
25. 7. Governments can sometimes improve market outcomes. Market failure occurs when the market fails to allocate
26. 7. Governments can sometimes improve market outcomes. Market failure may be caused by an externality, which
27. 7. Governments can sometimes improve market outcomes. Market failure may also be caused by market power,
28. 8. The standard of living depends on a country’s production. Standard of living may be measured
29. 8. The standard of living depends on a country’s production. Almost all variations in living standards
30. 8. The standard of living depends on a country’s production. Productivity is the amount of goods
31. 9. Prices rise when the government prints too much money. Inflation is an increase in the
32. 10. Society faces a short-run tradeoff between inflation and unemployment. The Phillips Curve illustrates the tradeoff
33. Summary When individuals make decisions, they face tradeoffs. Rational people make decisions by comparing marginal costs
34. Summary People can benefit by trading with each other. Markets are usually a good way of
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Слайд 2

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.

Слайд 3

Economy. . .
. . . The word economy comes from

a Greek word for “one who manages a household.”

Слайд 4

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?

Слайд 5

Society and Scarce Resources:
The management of society’s resources is important because

resources are scarce.

Слайд 6

Scarcity . . .
. . . means that society has limited

resources and therefore cannot produce all the goods and services people wish to have.

Слайд 7

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

Слайд 8

Economists study. . .
How people make decisions.
How people interact with

each other.
The forces and trends that affect the economy as a whole.

Слайд 9

Ten Principles of Economics
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.

How People Make Decisions

Слайд 10

Ten Principles of Economics
Trade can make everyone better off.
Markets are usually

a good way to organize economic activity.
Governments can sometimes improve economic outcomes.

How People Interact

Слайд 11

Ten Principles of Economics
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.

How the Economy as a Whole Works

Слайд 12

1. People face tradeoffs.
“There is no such thing as a free

lunch!”

Слайд 13

1. People face tradeoffs.
To get one thing, we usually have to

give up another thing.
Guns v. butter
Food v. clothing
Leisure time v. work
Efficiency v. equity (Ex: pie)

Making decisions requires trading off one goal against another.

Слайд 14

1. People face tradeoffs.
Efficiency means society gets the most that it

can from its scarce resources.
Equity means the benefits of those resources are distributed fairly among the members of society.

Efficiency v. Equity

Слайд 15

2. The cost of something is what you give up to

get it.

Decisions require comparing costs and benefits of alternatives.
Whether to go to college or to work?
Whether to study or go out on a date?
Whether to go to class or sleep in?

Слайд 16

2. The cost of something is what you give up to

get it.

The opportunity cost of an item is what you give up to obtain that item.

Слайд 17

3. Rational people think at the margin.
Marginal changes are small, incremental

adjustments to an existing plan of action.

People make decisions by comparing costs and benefits at the margin.

Слайд 18

4. People respond to incentives.
Marginal changes in costs or benefits motivate

people to respond.
The decision to choose one alternative over another occurs when that alternative’s marginal benefits exceed its marginal costs!

Слайд 19

LA Laker basketball star Kobe Bryant chose to skip college and

go straight to the NBA from high school when offered a $10 million contract.

4. People respond to incentives.

Слайд 20

5. Trade can make everyone better off.
People gain from their ability

to trade with one another.
Competition results in gains from trading.
Trade allows people to specialize in what they do best.

Слайд 21

6. Markets are usually a good way to organize economic activity.
In

a market economy, households decide what to buy and who to work for.
Firms decide who to hire and what to produce.

Слайд 22

6. Markets are usually a good way to organize economic activity.
Adam

Smith made the observation that households and firms interacting in markets act as if guided by an “invisible hand.”

Слайд 23

6. Markets are usually a good way to organize economic activity.
Because

households and firms look at prices when deciding what to buy and sell, they unknowingly take into account the social costs of their actions.
As a result, prices guide decision makers to reach outcomes that tend to maximize the welfare of society as a whole.

Слайд 24

7. Governments can sometimes improve market outcomes.
When the market fails (breaks

down) government can intervene to promote efficiency and equity.

Слайд 25

7. Governments can sometimes improve market outcomes.
Market failure occurs when the

market fails to allocate resources efficiently.

Слайд 26

7. Governments can sometimes improve market outcomes.
Market failure may be caused

by an externality, which is the impact of one person or firm’s actions on the well-being of a bystander.

Слайд 27

7. Governments can sometimes improve market outcomes.
Market failure may also be

caused by market power, which is the ability of a single person or firm to unduly influence market prices.

Слайд 28

8. The standard of living depends on a country’s production.
Standard of

living may be measured in different ways:
By comparing personal incomes.
By comparing the total market value of a nation’s production.

Слайд 29

8. The standard of living depends on a country’s production.
Almost all

variations in living standards are explained by differences in countries’ productivities.

Слайд 30

8. The standard of living depends on a country’s production.
Productivity is

the amount of goods and services produced from each hour of a worker’s time.

Higher productivity ⇨ Higher standard of living

Слайд 31

9. Prices rise when the government prints too much money.
Inflation is

an increase in the overall level of prices in the economy.
One cause of inflation is the growth in the quantity of money.
When the government creates large quantities of money, the value of the money falls.

Слайд 32

10. Society faces a short-run tradeoff between inflation and unemployment.
The Phillips

Curve illustrates the tradeoff between inflation and unemployment:
⇩Inflation ⇨ ⇧Unemployment
It’s a short-run tradeoff!

Слайд 33

Summary
When individuals make decisions, they face tradeoffs.
Rational people make decisions by

comparing marginal costs and marginal benefits.

Слайд 34

Summary
People can benefit by trading with each other.
Markets are usually a

good way of coordinating trades.
Government can potentially improve market outcomes.

Principles of Economics

Содержание

Ten Principles of EconomicsChapter 1Copyright © 2001 by Harcourt, Inc. All rights

Economy. . . . . . The word economy comes from

A household and an economy face many decisions:Who will work?What goods

Society and Scarce Resources:The management of society’s resources is important because

Scarcity . . .. . . means that society has limited

EconomicsEconomics is the study of how society manages its scarce resources.

Economists study. . . How people make decisions. How people interact with

Ten Principles of EconomicsPeople face tradeoffs.The cost of something is what

Ten Principles of EconomicsTrade can make everyone better off.Markets are usually

Ten Principles of EconomicsThe standard of living depends on a country’s

1. People face tradeoffs.“There is no such thing as a free

1. People face tradeoffs.To get one thing, we usually have to

1. People face tradeoffs.Efficiency means society gets the most that it

2. The cost of something is what you give up to

2. The cost of something is what you give up to

3. Rational people think at the margin.Marginal changes are small, incremental

4. People respond to incentives.Marginal changes in costs or benefits motivate

LA Laker basketball star Kobe Bryant chose to skip college and

5. Trade can make everyone better off.People gain from their ability

6. Markets are usually a good way to organize economic activity.In

6. Markets are usually a good way to organize economic activity.Adam

6. Markets are usually a good way to organize economic activity.Because

7. Governments can sometimes improve market outcomes.When the market fails (breaks

7. Governments can sometimes improve market outcomes.Market failure occurs when the

7. Governments can sometimes improve market outcomes.Market failure may be caused

7. Governments can sometimes improve market outcomes.Market failure may also be

8. The standard of living depends on a country’s production.Standard of

8. The standard of living depends on a country’s production.Almost all

8. The standard of living depends on a country’s production.Productivity is

9. Prices rise when the government prints too much money.Inflation is

10. Society faces a short-run tradeoff between inflation and unemployment.The Phillips

SummaryWhen individuals make decisions, they face tradeoffs.Rational people make decisions by

SummaryPeople can benefit by trading with each other.Markets are usually a

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Ten Principles of Economics
Chapter 1
Copyright © 2001 by Harcourt, Inc. All rights

Economy. . .
. . . The word economy comes from

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Who will work?
What goods

Society and Scarce Resources:
The management of society’s resources is important because

Scarcity . . .
. . . means that society has limited

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The cost of something is what

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Marginal changes in costs or benefits motivate

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