Professional Documents
Culture Documents
McGraw-Hill/Irwin
Introduction
LO1
Economics defined:
LO1
Marginal analysis
Rational self-interest(max.
satisfaction)
LO1
Purposeful Behavior
LO1
Rational self-interest
Individuals and utility
Firms and profit
Desired(preferred) outcomes
Marginal Analysis
LO1
Marginal benefit
Marginal cost
Marginal means extra
Comparison between marginal
benefit and marginal cost
Observe
Formulate a hypothesis
LO2
Economic principles
Generalizations
Graphical expression
Microeconomics and
Macroeconomics
Microeconomics
Macroeconomics
LO3
Positive economics
Normative economics
LO3
Limited income
Unlimited wants
A budget line
LO4
Change in income
DVDs Books
$20
$10
10
60
52
44
36
28
110
012
Quantity of DVDs
$120 Budget
Income = $120
=6
Pdvd = $20
Unattainable
Income = $120
= 12
Pb = $10
4
2
0
Attainable
10
12
LO4
14
Global Perspective
LO4
Scarce resources
LO4
Land
Labor
Capital
Entrepreneurial Ability
Entrepreneurial ability
LO4
Takes initiative
Makes decisions
Innovates
Takes risk
LO5
Full employment
Fixed resources
Fixed technology
Two goods
Pizzas
(in hundred thousands)
Industrial Robots
(in thousands)
10
Industrial Robots
A
B
Unattainable
Attainable
E
0
Pizzas
LO5
The law of
increasing
opportunity
costs makes
the PPC
concave.
8 9
Optimal Allocation
MC
15
a
MB = MC
e
10
LO5
d
MB
2
3
Quantity of Pizza(hundred
thousands)
Industrial Robots
A Growing Economy
14
13
12
11
10
9
8
7
6
5
4
3
2
1
A
B
Unattainable
A
B
Economic
Growth
C
C
D
D
Now Attainable
Attainable
E
0
Pizzas
LO6
8 9
A Growing Economy
Economic Growth
LO6
More resources
Improved resource quality
Technological advances
A Growing Economy
Production Alternatives
LO6
Type of Product
A'
B'
C'
D'
E'
Pizzas
(in hundred thousands)
Industrial Robots
(in thousands)
14
12
Industrial Robots
A Growing Economy
14
13
12
11
10
9
8
7
6
5
4
3
2
1
A
B
Unattainable
A
B
Economic
Growth
C
C
D
D
Now Attainable
Attainable
E
0
Pizzas
LO6
8 9
Current
Curve
Presentville
LO6
Current
Curve
Futureville
International Trade
LO6
Specialization
Increased production possibilities
Loaded terminology
Fallacy of composition
Post hoc fallacy
Correlation not causation