经济学原理英文版第一章PPT
西方经济学曼昆 PPt 经济学十大原理
二、经济学的研究内容 1.人们如何做出决策? 2.个人决策如何影响他人?人们 怎样交易? 3.所有决策和相互交易共同组成 “经济”,影响整个经济的力量 和趋势如何。
三、经济学十大原理 1、人们面临权衡取舍
资源稀缺性要求人们做出选择。“鱼和 熊掌不可兼得”人们将在稀缺资源的多种用 途中进行权衡比较,根据自己的各种需要的 强弱缓急做出选择,找出对自己最有利的配 置方法。如个人的选择:安排时间、金钱 社会的选择:“大炮与黄油”、效率 (efficiency)与平等(equity)、保护环境与 增加收入
5、贸易能使每个人状况更好
竞争各方相互贸易,每个人、 竞争各方相互贸易,每个人、每个国家可 以专门从事自己最擅长的活动,通过交易,人 以专门从事自己最擅长的活动,通过交易, 们可以按较低的成本获得各种各样的物品和劳 务。
6、市场通常是组织经济活动的一种好方法
社会不同的选择和资源配置方式决定了不同的 经济制度。市场经济(market economy)和计划经 济差别: *决策机制不同:前者由市场参与者分散、自 主决策。后者由至高无上的中央计划机关决策 *协调机制不同:前者用价格协调千千万万的决 策,后者有金字塔形的等级体系,用自上而下的 命令方式贯彻决策,保证决策协调 *激励机制不同:前者以个人利益为中心,后者 以集体主义为中心
曼昆经济学原理 第一章ppt
2
The principles of HOW PEOPLE MAKE DECISIONS
HOW PEOPLE MAKE DECISIONS
Principle #1: People Face Tradeoffs
All decisions involve tradeoffs. Examples:
can to achieve their objectives.
make decisions by evaluating costs and benefits
of marginal changes – incremental adjustments to an existing plan.
TEN PRINCIPLES OF ECONOMICS
In this chapter, look for the answers to these questions:
What kinds of questions does economics address?
What are the principles of how people make
When a manager considers whether to increase
output, she compares the cost of the needed labor and materials to the extra revenue.
TEN PRINCIPLES OF ECONOMICS
Equality: when prosperity is distributed uniformly
among society’s members
曼昆《经济学原理》(宏观经济学分册)英文原版PPT课件
© 2007 Thomson South-Western
Table 2 Real and Nominal GDP
© 2007 Thomson South-Western
Table 2 Real and Nominal GDP
© 2007 Thomson South-Western
Table 2 Real and Nominal GDP
© 2007 Thomson South-Western
THE ECONOMY’S INCOME AND EXPENDITURE
• When judging whether the economy is doing well or poorly, it is natural to look at the total income that everyone in the economy is earning.
Y = C + I + G + NX
© 2007 Thomson South-Western
THE COMPONENTS OF GDP
• Consumption (C):
• The spending by households on goods and services, with the exception of purchases of new housing.
© 2007 Thomson South-Western
THE MEASUREMENT OF GROSS DOMESTIC PRODUCT
• The equality of income and expenditure can be illustrated with the circular-flow diagram.
曼昆英文版《经济学原理》01-经济学十大原理
Marginal changes are small, incremental adjustments to an existing plan of action.
People make decisions by comparing costs and benefits at the margin.
Guns v. butter Food v. clothing Leisure time v. work Efficiency v. equity Making decisions requires trading off one goal against another.
1. People face tradeoffs. Efficiency v. Equity
1. People face tradeoffs.
"There is no such thing as a free lunch! lunch!"
1. People face tradeoffs.
To get one thing, we usually have to give up another thing.
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.
经济学原理英文课件 (1)
Policy Effects in the Goods and Money Markets
Expansionary Policy Effects Contractionary Policy Effects The Macroeconomic Policy Mix
An increase in the interest rate from 3 percent to 6 percent lowers planned aggregate expenditure and thus reduces equilibrium income from Y0 to Y1.
7 of 39
Looking Ahead: Determining the Price Level
Appendix: The IS-LM Model
1 of 39
goods market The market in which goods and services are exchanged and in which the equilibrium level of aggregate output is determined.
Aggregate Markets
CHAPTER OUTLINE Planned Investment and the Interest Rate
Other Determinants of Planned Investment Planned Aggregate Expenditure and the Interest Rate
Planned Investment and the Interest Rate
曼昆《经济学原理》(宏观经济学分册)英文原版PPT课件
THE COMPONENTS OF GDP • GDP includes all items produced in the economy and sold legally n markets. • What Is Not Counted in GDP?
– Every transaction has a buyer and a seller. – Every dollar of spending by some buyer is a dollar of income for some seller.
© 2007 Thomson South-Western
Y = C + I + G + NX
© 2007 Thomson South-Western
THE COMPONENTS OF GDP • Consumption (C):
• The spending by households on goods and services, with the exception of purchases of new housing. • Investment (I):
© 2007 Thomson South-Western
Table 2 Real and Nominal GDP
© 2007 Thomson South-Western
Table 2 Real and Nominal GDP
© 2007 Thomson South-Western
Table 2 Real and Nominal GDP
• “. . . Final . . .” – It records only the value of final goods, not intermediate goods (the value is counted only once).
经济学原理英文版课件-国民经济核算
Markets for Goods & Services
Spending (=GDP)
G&S bought
Firms
Households
Factors of production
Wages, rent, profit (=GDP)
use.
Markets for Factors of Production
▪ For homeowners, consumption includes the imputed rental value of the house, but not the purchase price or mortgage payments.
14
use.
Investment (I)
▪ is total spending on goods that will be used in the future to produce more goods.
economy’s g&s. ▪ Imports are the portions of C, I, and G
that are spent on g&s produced abroad. ▪ Adding up all the components of GDP gives:
Y =C + I + G + NX
曼昆《经济学原理》(宏观经济学分册)英文原版PPT课件精编版
Factors of production
Wages, rent, and profit
MARKETS FOR
Labor, land, and capital
FACTORS OF PRODUCTION
•Households sell •Firms buy
Income
= Flow of inputs and outputs
= Flow of dollars
© 2007 Thomson South-Western
THE MEASUREMENT OF GROSS பைடு நூலகம்OMESTIC PRODUCT
• Gross domestic product (GDP) is a measure of the income and expenditures of an economy.
THE COMPONENTS OF GDP
• GDP includes all items produced in the economy and sold legally in markets.
• What Is Not Counted in GDP?
– GDP excludes most items that are produced and consumed at home and that never enter the marketplace.
• “ . . . Within a Country . . .”
– It measures the value of production within the geographic confines of a country.
• “. . . In a Given Period of Time.”
经济学原理英文版课件-总需求及供给
6
Classical Economics—A Recap
▪ Most economists believe classical theory describes the world in the long run, but not the short run.
16,000
14,000 12,000
U.S. real GDP, billions of 2005 dollars
10,000
8,000
6,000 4,000 2,000
The shaded bars are
recessions
0 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
5
Classical Economics—A Recap
▪ The previous chapters are based on the ideas of classical economics, especially:
▪ The Classical Dichotomy, the separation of variables into two groups: ▪ Real – quantities, relative prices ▪ Nominal – measured in terms of money
17
1 A C T I V E L E A R N I N G
The Aggregate-Demand curve
What happens to the AD curve in each of the following scenarios?
曼昆哈佛大学经济学原理第一章
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Ten Principles of Economics
Chapter 1
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A household and an economy face many ons:
Who will work? What goods and how many of them
Ten Principles of Economics
How People Make Decisions
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.
曼昆《经济学原理第三版》原版中英文双语PPT精品课程课件全册课件汇总
经济一词来源于希腊语,意思是 “管理家庭的人”。
A household and an economy face many decisions:
一个家庭和经济体面临很多决策:
Who
will work?
谁去工作?
What
goods and how many of them should be produced? 应该生产什么物品?应该生产多少?
1. People face tradeoffs.
To get one thing, we usually have to give up another thing.
Байду номын сангаас
Guns v. butter Food v. clothing Leisure time v. work Efficiency v. equity
人们如何作出决策
How The
people interact with each other.
人们如何与他人相互交易
forces and trends that affect the economy as a whole.
影响整体经济的力量和趋势
Ten Principles of Economics
A household and an economy face many decisions:
一个家庭和经济体面临很多决策:
What
resources should be used in production? 应该用什么资源生产? At what price should the goods be sold? 物品的销售价格应该是多少?
. . . means that society has limited resources and therefore cannot produce all the goods and services people wish to have. …意思是说,社会拥有有限的资源,不 能生产出人们想要的所有物品与劳务。
第一章经济学原理共36页
Economics
Economics is the study of how society manages its scarce resources.
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Ten Principles of Economics
How the Economy as a Whole Works
8. The standard of living depends on a country’s production.
9. Prices rise when the government prints too much money.
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
Ten Principles of Economics
Chapter 1
Copyright © 2019 by Harcourt, Inc. All rights reserved. Requests for permission to make copies of any part of the
10. Society faces a short-run tradeoff between inflation and unemployment.
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Ten Principles of Economics
How People Interact
曼昆《经济学原理》英文原版重要知识点课件
13FINAL THOUGHTS36Five Debates OverMacroeconomicPolicyFive Debates over MacroeconomicPolicy1.Should monetary and fiscal policymakers try tostabilize the economy?2.Should monetary policy be made by rule ratherthan by discretion?than by discretion?3.Should the central bank aim for zero inflation?4.Should the government balance its budget?5.Should the tax laws be reformed to encourage saving?1Should monetary and fiscal 1.Should monetary and fiscalpolicymakers try to stabilize the economy?Pro: Policymakers should try tostabilize the economy•The economy is inherently unstable, and left on its own will fluctuate.•Policy can manage aggregate demand in order to offset this inherent instability and reduce the to offset this inherent instability and reduce the severity of economic fluctuations.Pro: Policymakers should try tostabilize the economy •There is no reason for society to suffer through the booms and busts of the business cycle.•Monetary and fiscal policy can stabilize aggregate demand and,thereby,production and aggregate demand and, thereby, production and employment.Con: Policymakers should not try to stabilize the economy •Monetary policy affects the economy with long and unpredictable lags between the need to act and the time that it takes for these policies to work.•Many studies indicate that changes in monetary policy have little effect on aggregate demand until about six months after the change is made.Con: Policymakers should not try to stabilize the economy •Fiscal policy works wi th a lag because of the long political process that governs changes in spending and taxes.•It can take years to propose,pass,andIt can take years to propose, pass, and implement a major change in fiscal policy.Con: Policymakers should not try to stabilize the economy•All too often policymakers can inadvertently exacerbate rather than mitigate the magnitude of economic fluctuations.•It might be desirable if policy makers couldPro: Monetary policy should bemade by rule •Discretionary monetary policy c an suffer fromincompetence and abuse of power.•To the extent that central bankers allythemselves with politicians,discretionary themselves with politicians, discretionarypolicy can lead to economic fluctuations thatreflect the electoral calendar—the politicalbusiness cycle.Pro: Monetary policy should bemade by rule•There may be a discrepancy between what policymakers say they will do and what they actually do—called time inconsistency of policy.p y•Because policymakers are so often time inconsist ent, people are skeptical when central bankers announce their intentions to reduce the rate of inflation.Pro: Monetary policy should bemade by rule •Committing the Fed to a moderate and steady growth of the money supply would limit incompetence, abuse of power, and time inconsistency.y Con: Monetary policy should not bemade by rule•An important advantage of discretionary monetary policy is its flexibility.•Inflexible policies will limit the ability of policymakers to respond to changing economic policymakers to respond to changing economic circumstances.Con: Monetary policy should not bemade by rule•The alleged problems with discretion and abuseof power are largely hypothetical.•Also, the importance of the political businesscycle is far from clear.cycle is far from clear.3.Should the central bank aim for zeroinflation?Pro: The central bank should aim forzero inflation•Inflation confers no benefit to society, but it imposes several real costs.•Shoeleather costs•Menu costs•Increased variabil ity of relative prices•Unintended changes in tax liabilities•Confusion and inconvenience•Arbitrary redistribution of wealth Pro: The central bank should aim forzero inflation•Reducing inflation is a policy with temporary costs and permanent benefits.•Once the disinflationary recession is over, the benefits of zero inflation would persist. benefits of zero inflation would persist.Con: The central bank should notaim for zero inflation•Zero inflation is probably unattainable, and toget there involves output, unemployment, andsocial costs that are too high.•Policymakers can reduce many of the costs ofPolicymakers can reduce many of the costs ofinflation without actually reducing inflation. 4.Should fiscal policymakers reducethe government debt?Pro: The government shouldbalance its budget •Budget deficits impose an unjustifiable burden on future generations by raising their taxes and lowering their incomes.•When the debts and accumulated interest come When the debts and accumulated interest come due, future taxpayers will face a difficult choice:•They can pay higher taxes, enjoy less governmentspending, or both.Pro: The government shouldbalance its budget•By shifting the cost of current government benefits to future generations, there is a bias against future taxpayers.•Deficits reduce national saving,leading to a Deficits reduce national saving, leading to a smaller stock of capital, which reduces productivity and growth.Con: The government should notbalance its budget•The problem with th e deficit is often exaggerated.•The transfer of debt to the future may be justified because some government purchases justified because some government purchases produce benefits well into the future.Con: The government should notbalance its budget•The government debt can continue to rise because population growth and technological progress increase the nation’s ability to pay the interest on the debt.5.Should the tax laws be reformed to encourage saving?Pro: Tax laws should be reformed toencourage saving•A nation’s saving rate is a key determinant of its long-run economic prosperity.•A nation’s productive capability is determined largely by how much it saves and invests for the largely by how much it saves and invests for the future.•When the savin g rate is higher, more resources are available for investment in new plant and equipment.Pro: Tax laws should be reformed toencourage saving•The U.S. tax system discourages saving in many ways, such as by heavily taxing the income from capital and by reducing benefits for those who have accumulated wealth.Pro: Tax laws should be reformed toencourage saving•The consequences of high capital income tax policies are reduced saving, reduced capital accumulation, lower labor productivity, and reduced economic growth.gPro: Tax laws should be reformed toencourage saving•An alternative to current tax policies advocated by many economists is a consumption taxconsumption tax.•With a consumption tax, a household pays taxes based on what it spends not on what it earns. based on what it spends not on what it earns.•Income that is saved is exempt from taxation untilthe saving is later withdrawn and spent onconsumption goods.Con: Tax laws should not bereformed to encourage saving •Many of the changes in tax la ws to stimulate saving would primarily benefit the wealthy.•High-income households save a higher fraction of their income than low-income households.•Any tax change that favors people who save willalso tend to favor people with high incomes.2009-11-1 C on: Tax laws should not be reformed to encourage saving • Reducing the tax burden on the wealthy would lead to a less egalitarian society. • This would also force the government to raise the tax burden on the poor. Con: Tax laws should not be reformed to e ncourage saving • Raising public saving by eliminating the government’s budget deficit would provide a more direct and equitable way to increase national saving.g Summary • Advocates of active monetary and fiscal policy view the economy as inherently unst able and believe policy can be used to offset this inherent instability. y • Critics of active policy emphasize that policy affects the economy with a lag and our ability to forecast future economic conditions is poor, both of which can lead to policybein g destabilizing. Summary • Advocates of rules for monetary policy argue that discretionary policy can suffer from incompetence, abuse of power, and time inconsistency. y • Critics of rules for monetary policy argue that discretionary policy is more flexibl e in responding to economic circumstances. Summary • Advocates of a zero-inflation target emphasize that inflation has many costs and few if any benefits. zero-inflation • Critics of a zero inflation target claim that moderate inflation imposes only small costs on society, whereas the recession necessary to reduce inflation is quite costly. Summary • Advocates of reducing the government debt argue that the debt imposes a burden on future generations by raising their taxes and lowering their incomes. • Criti cs of reducing the government debt argue that the debt is only one small piece of fiscal policy. 62009-11-1 Summary • Advocates of tax incentives for saving point out that our society discourages saving in many ways such as taxing income from capital and reducing benefits for those who have g accumulated wealth. • Critics of tax incentives argue that many proposed changes to stimulate saving would primarily benefit the wealthy and also might have only a small effect on private saving. 7。
经济学原理(英文版)
经济学原理(英文版)●Chapter 1 The scope and Method of Economics●Why study Economics?●To learn a way of Thinking●Opportunity Cost 机会成本●The best alternative that we forgo, or give up, when we make a choice or adecision.指决策过程中面临多项选择,当中被放弃而价值最高的选择●Cost: What You Must Give Up●Opportunity cost is the best thing that you must give up to get something -thehighest-valued alternative forgone.●Benefit: What You Gain●Benefit is the gain or pleasure that something brings.●Benefit is measured by what you are willing to give up.●Are there always opportunity cost for every choice we made?●Pre-conditions:●1.The resource is scarce;limited●2. Multiple usage for a resources;●3. The resource has been fully utilized;●4. Resources can be flowed freely●=/ actual cost, national cost●Marginalism 边际主义●The process of analyzing the additional or incremental(增加的) costs or benefitsarising from a choice or decision.●Marginal Cost 边际成本●is the opportunity cost of a one-unit increase in an activity.●you must give up to get one additional unit of it.●Marginal Benefit 边际效益●is the what you gain when you get one more unit of something.●is the what you gain when you get one more unit of up to get one additionalunit of it.●To understand Society●To be an informed citizen/voter●The scope of Economics●Microeconomics●The study of the choices that individuals and businesses make and the way thesechoices interact and are influenced by governments.●firms●households●Macroeconomics●The study of the aggregate (or total 总计) effects on the national economy andthe global economy of the choices that individuals, businesses, and governmentsmake.●income●employment●output●The method of Economics●positive economics 实证经济学●An approach to economics that seeks to understand behavior and the operation ofsystems without making judgments. It describes what exists and how it works.●normative economics 规范经济学●An approach to economics that analyzes outcomes of economicbehavior,evaluates them as good or bad, and may prescribe courses of action.Alsocalled policy economics.●should be ...●Chapter 2●The economic problem : Scarcity and choice●●The three basic question●What gets produced?●How is it produced ?●Who gets what is produced?●经济学要解决的问题●资源配置(和利用)Resource allocation●Scarcity means that wants are greater than what we can produce with ourresources.缺乏●Chapter 3●Demand, supply ,and market equilibrium●Firms and Households: The basic decision making units●Firm●An organization that transforms resources (inputs)into products(outputs).Firms are the primary producing units in a market economy.●entrepreneur●A person who organizes, manages, and assumes the risks of a firm,takinga new idea or a new product and turning it into a successful business.(produce to earn profit)●households●The consuming units in an economy.●Input markets and output markets: the circular flow●Output markets●The markets in which goods and services are exchanged.●Input markets●The markets in which the resources used to produce goods and services areexchanged.●Factors of production●The inputs into the production process. Land, labor, and capital are the threekey factors of production.●Demand in product and output market●quantity demand●The amount (number of units) of product that a household would buy in agiven period if it could buy all it wanted at the current market price.●demand curve●A graph illustrating how much of a given product a household would bewilling to buy at different prices.●●law of demand●The negative relationship between price and quantity demanded: Ceterisparibus, as price rises, quantity demanded decreases; as price falls,quantity demanded increases. 反比关系●Other determinants of Household demand●Income and Wealthincome available to the household●Prices of other goods and service●inferior goods 次品●substitutes 替代品●A price up, B demand upB 是A的替代品●complements,complementary goods 互补品●car price up, gasoline demand down●taste and preference●expectation 影响需求consumption policies●Shift of demand versus movement along a demand curve●shift of a demand curve (曲线移动) change in demand●factors shift the demand curve●buyers' incomes●the price of a substitute good●the number of buyers●movement along a demand curve (点移动)change in quantity demanded●Market demand●summing the quantities every consumer is willing to buy at each differentprice.●Supply in product and output market●Profit●The difference between revenues and costs.实现利润最大化是企业生产的目的●quantity supplied●The amount of a particular productthat a firm would be willingand able to offerfor sale at aparticular price during a giventime period.●law of supply●The positive relationship between price and quantity of a good supplied:Anincrease in market price will lead to an increase in quantity supplied, and adecrease in market price will lead to a decrease in quantity supplied. 正比关系●●Market equilibrium●Qd =Qs●there is no tendency for price to change●Excess demand●●●Excess supply●●Chapter 4●Demand and Supply applications 需求和供应的应用●Price rationing 价格配给● is the process by which the market system allocates goods and services toconsumers when quantity demanded exceeds quantity supplied.●●Constraints on the Market and Alternative rationing mechanism 非价格配给制●Price ceiling (最高限价)●A maximum price that sellers may charge for a good, usually set bygovernment.●non-price rationing●Queuing (排队)●Waiting in line as a means of distributing goods and services: a nonpricerationing mechanism.●Ration coupons (优惠券)●Tickets or coupons that entitle individuals to purchase a certain amount ofa given product per month.●Favored customers●Those who receive special treatment from dealers during situations ofexcess demand.●Black market (黑市)●A market in which illegal trading takes place at market-determined prices.●price floor 价格下限●A minimum price below which exchange is not permitted.●Supply and Demand and Market efficiency●Consumer surplus 消费者盈余●The difference between the maximum amount a person is willing to pay for agood and its current market price.●愿意支付与实际支付的差额。
经济学原理英文版课件-金融体系
Y=C+I+G Solve for I:
national saving
I = Y – C – G = (Y – T – C) + (T – G)
Saving = investment in a closed economy
8
m use.
Budget Deficits and Surpluses
Budget surplus = an excess of tax revenue over govt spending = T–G = public saving
▪ Decline in confidence in financial institutions ▪ 2008–2009: Customers with uninsured deposits began pulling their funds out of financial institutions.
6
m use.
National Saving
National saving
= private saving + public saving
= (Y – T – C) + (T – G)
=
Y–C–G
= the portion of national income that is not used for consumption or government purchases
5
m use.
Different Kinds of Saving
Private saving = The portion of households’ income that is not used for consumption or paying taxes =Y–T–C
A-Levle 经济学 Economics 第一章 PPT (精心打印版)CIE IB AP 通用
What will be the opportunity cost in monetary terms to the driver over the year of travelling by car rather than by public transport? A $1500 B $3000 C $3700 D $7800
Chapter 1 Basic economic ideas and resources allocation
Aaliyah Yu
2020
Agenda
1. Scarcity, choice and opportunity cost 2. Positive and normative statements 3. Factors of production 4. Resource allocation in different economic systems and issues of transition 5. Production possibility curves 6. Money 7. Classification of goods and services
第一章经济学原理
4. People respond to incentives.
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.
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
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?
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
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
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.
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Many decisions are not “all or nothing,”
but involve marginal changes – incremental adjustments to an existing plan.
13
HOW PEOPLE INTERACT
Principle #5: Trade Can Make Everyone Better Off
Rather than being self-sufficient, people can
specialize in producing one good or service and exchange it for other goods.
TEN PRINCIPLES OF ECONOMICS
14
CHAPTER 1
HOW PEOPLE INTERACT
Principle #6: Markets Are Usually A Good Way to Organize Economic Activity
whole works?
CHAPTER 1
TEN PRINCIPLES OF ECONOMICS
2
What Economics Is All About
Scarcity refers to the limited nature of society’s
resources.
Economics is the study of how society manages
CHAPTER 1
TEN PRINCIPLES OF ECONOMICS
8
HOW PEOPLE MAKE DECISIONS
Principle #3: Rational People Think at the Margin
A person is rational if she systematically and
CHAPTER 1
TEN PRINCIPLES OF ECONOMICS
7
HOW PEOPLE MAKE DECISIONS
Principle #2: The Cost of Something Is What You Give Up to Get It
Examples: The opportunity cost of…
CHAPTER 1 TEN PRINCIPLES OF ECONOMICS
3
HOW PEOPLE MAKE DECISIONS
Decision making is
at the heart of economics.
The first four
principles deal with how people make decisions.
anThe opportunity cost of any item is whatever
must be given up to obtain it.
It is the relevant cost for decision making.
An “economy” is just
a group of people interacting with each other.
The next
three principles deal with how people interact.
CHAPTER 1
TEN PRINCIPLES OF ECONOMICS
What kinds of questions does economics
address?
What are the principles of how people make
decisions?
What are the principles of how people interact? What are the principles of how the economy as a
Society faces an important tradeoff:
efficiency vs. equity
efficiency: getting the most out of scarce
resources
equity: distributing prosperity fairly among
A. Blue book value is $6500 if transmission works, $5700 if it doesn’t
B. Blue book value is $6000 if transmission works, $5500 if it doesn’t
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HOW PEOPLE INTERACT
CHAPTER 1 TEN PRINCIPLES OF ECONOMICS
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ACTIVE LEARNING
Exercise
1:
You are selling your 1996 Mustang. You have already spent $1000 on repairs. At the last minute, the transmission dies. You can pay $600 to have it repaired, or sell the car “as is.” In each of the following scenarios, should you have the transmission repaired?
1
Ten Principles of Economics
PRINCIPLES OF
MICROECONOMICS
FOURTH EDITION
N. G R E G O R Y M A N K I W
In this chapter, look for the answers to these questions:
CHAPTER 1 TEN PRINCIPLES OF ECONOMICS
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HOW PEOPLE MAKE DECISIONS
Principle #2: The Cost of Something Is What You Give Up to Get It
Making decisions requires comparing the costs
…going to college for a year is not just the tuition, books, and fees, but also the foregone wages. …seeing a movie is not just the price of the ticket, but the value of the time you spend in the theater.
CHAPTER 1
TEN PRINCIPLES OF ECONOMICS
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HOW PEOPLE MAKE DECISIONS
Principle #1: People Face Tradeoffs
All decisions involve tradeoffs. Examples:
Going to a party the night before your midterm
Rational people respond to incentives because
they make decisions by comparing costs and benefits. Examples: • In response to higher gas prices, sales of “hybrid” cars (e.g., Toyota Prius) rise. • In response to higher cigarette taxes, teen smoking falls.
leaves less time for studying.
Having more money to buy stuff requires working
longer hours, which leaves less time for leisure.
Protecting the environment requires resources
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HOW PEOPLE MAKE DECISIONS
Principle #4: People Respond to Incentives
incentive: something that induces a person to
act, i.e. the prospect of a reward or punishment.
A firm considers whether to increase output,
comparing the cost of the needed labor and materials to the extra revenue.
CHAPTER 1 TEN PRINCIPLES OF ECONOMICS
its scarce resources, including • how people decide how much to work, save, and spend, and what to buy • how firms decide how much to produce, how many workers to hire • how society decides how to divide its resources between national defense, consumer goods, protecting the environment, and other needs