LU 1
Introduction to Economics ‼
Ten Principles of Economics ✏
The Word Economy comes from a Geek word for "one who manages a household"
Economics is the study of how society manages its scarce resources
Scarcity means that society has limited resources and therefore cannot produce all the goods and
Economics Models 🖊
- Circular Flow Diagram
- Production Possibilities Frontier
Interdependence and the Gains from Trade
Comparative advantage
A Parable For The Modern Economy
How People Make decisions
- People Face Trade-offs
Efficiency versus Equity
- The Cost of Somethings is What You Give Up to Get It
- Rational People Think at the Margin
Opportunity Cost
- People Respond to Incentives
How People Interact
- Trade Can Make Everyone Better Off
- Markets are usually a Good Way to Organize Economic Activity
- Government Can Sometimes Improve Market Outcomes.
How The Economy As A Whole Works
- A Country's Standard of Living Depends on Its Ability to Produce Goods and Services.
Productivity
- Prices Rise When the Government Prints Too Much Money
Inflation
- Society Faces a Short-run Trade-off between Inflation and Unemployment
✅Inflation or Unemployment
✅ Trade off
The economist as policy adviser
Positive versus Normative Analysis
Absolute Advantage
Opportunity cost and comparative advantage
Specialization and Trade
Comparative advantage and trade
Production possibilities