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Economics: Foundations and Models

Economics: Foundations and Models

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Economics: Foundations and Models

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  1. Economics:Foundations and Models

  2. What Happens When U.S. FirmsMove to China? After studying

  3. Economics: Foundations and Models

  4. Economics: Foundations and Models

  5. Building a Foundation: Economics and Individual Decisions

  6. Apple Computer Makes a Decision at the Margin

  7. The Economic Problem That Every Society Must Solve

  8. The Economic Problem That Every Society Must Solve Centrally Planned Economies versus Market Economies

  9. Efficiency and Equity

  10. Economic Models

  11. Economic Models

  12. Economic Models Normative and Positive Analysis

  13. Microeconomics and Macroeconomics

  14. A Preview of Important Economic Terms

  15. The Halo Effect

  16. Allocative efficiency CCentrally planned economy EEconomic model EEconomic variable EEconomics EEquity MMacroeconomics MMarginal analysis MMarket

  17. Appendix 1A:Using Graphs and Formulas

  18. Appendix 1A:Using Graphs and Formulas Graphs of One Variable

  19. Appendix 1A:Using Graphs and Formulas Graphs of One Variable

  20. Appendix 1A:Using Graphs and Formulas Graphs of Two Variables

  21. Appendix 1A:Using Graphs and Formulas

  22. Appendix 1A:Using Graphs and Formulas

  23. Appendix 1A:Using Graphs and Formulas

  24. Appendix 1A:Using Graphs and Formulas

  25. Appendix 1A:Using Graphs and Formulas

  26. Appendix 1A:Using Graphs and Formulas

  27. Appendix 1A:Using Graphs and Formulas

  28. Appendix 1A:Using Graphs and Formulas

  29. Click to edit Master title style and for two-line headings Click to edit Master text styles

  30. CHAPTER 1: Economics: Foundations and Models

  31. c h a p t e r o n e

  32. Prepared by: Fernando & Yvonn Quijano

  33. Click to edit Master text styles SSecond level TThird level FFourth level FFifth level

  34. LEARNING OBJECTIVES

  35. 1

  36. 2

  37. 3

  38. 4

  39. 5 Many U.S., Japanese, and European firms have been moving the production of goods and services to other countries.

  40. Scarcity The situation in which unlimited wants excee

  41. LEARNING OBJECTIVE 1 Market A group of buyers and sellers of a good or service and the institution or arrangement by which they come together to trade. Marginal analysis Analysis that involves comparing marginal benefits and marginal costs. Three important ideas: PPeople are rational PPeople respond to economic incentives OOptimal decisions are made at the margin

  42. 1 - 1

  43. LEARNING OBJECTIVE 1 Should Apple produce an additional 300,000 iPods? IIn solving the problem, consider the fo

  44. LEARNING OBJECTIVE 2 Trade-off The idea that because of scarcity, producing more of one good or service means producing less of another good or service. Three fundamental questions: WWhat goods and services will be produced? HHow will the goods and services be produced? WWho will receive the goods and services produced?

  45. Centrally planned economy An economy in which the government decides how economic resources will be allocated. MMarket economy An economy in which the decisions of households and firms interacting in markets allocate economic resources.

  46. Mixed economy An economy in which most economic decisions result from the interaction of buyers and sellers in markets, but in which the government plays a significant role in the allocation of resources.

  47. Productive efficiency The situation in which a good or

  48. LEARNING OBJECTIVE 3 To develop a model, economists generally follow these steps: DDecide on the assumptions

  49. LEARNING OBJECTIVE 3 The Role of Assumptions in Economic Models EEconomic models make behavioral assumptions about the motives of consumers and firms. FForming and Testing Hypotheses in Economic Models

  50. Economic variable Something measurable that can have different values, such as the wages of software programmers.