Chapters 1 Bonus remains for Tuesday 9/13, Chapter 2 Bonus Friday 9/16



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Bonus Dates

  • If you get your homework in before the actual due date I will give five bonus points for the homework assignment for each chapter.
  • Chapters 1 Bonus remains for Tuesday 9/13, Chapter 2 Bonus Friday 9/16.
  • Otherwise all homework is due the day of the Unit Test set tentatively for the week of September 19-23.

I. What is Economics – The Language

  • A. Definition – Social Science concerned with the efficient use of scarce resources to achieve maximum satisfaction of human material wants.
  • HUH?!???????

I. What is Economics cont…?

  • B. Unlimited Wants satisfied by Limited Resources and using those resources as efficiently as possible.
  • Case example USA vs. USSR
  • See this stuff is easy!!!

In the beginning…

I. What is Economics cont…?

  • C. Scarcity and Choice
  • 1. Because resources are scarce it forces individuals and countries to make choices.
  • 2. Those choices always come with some sort of cost.

What is Economics?

  • Economics: the study of Unlimited Wants Satisfied by Limited Resources.
  • Unlimited v. Limited: Forces people, nations, & the world to deal with the problem of Scarcity.
  • Scarcity forces Choice!
  • 3. Economics is the study of Choice!!!
  • Mick Jagger
  • The Rolling Stones
  • Mick Jagger
  • The Rolling Stones
  • No, you can't always get what you want You can't always get what you want You can't always get what you want
  • Mick Jagger
  • The Rolling Stones
  • You can't always get what you want You can't always get what you want You can't always get what you want But if you try sometimes you might find You get what you need
  • Choice
  • Economics, the study of choice!

I. What is Economics cont…?

  • “There is no such thing as a free lunch.”
  • One of the most repeated quotes in all of economics.
  • What does it mean??
  • Because resources are scarce and we must make choices based on those limited resources, our choices ALWAYS come with a cost!
  • Examples – Fill your gas tank lately?

Wants????

  • Food, Clothing, and Shelter
  • Cars, Concerts, and CD’s
  • Primary v Secondary Wants
  • Different people?
  • Different nations?
  • Different wants?
  • Want's are UNLIMITED!

I. What is Economics cont…?

  • C. Scarcity and Choice
  • 4. Opportunity costs – the items you sacrifice in order to acquire what you want.
  • - Explicit costs - $
  • - Implicit costs – time, energy…
  • Scarcity forces
  • Choice
  • Economics, the study of choice!

Making a Choice Carries a Cost!

  • Opportunity Cost
  • When one road is taken an opportunity on another road is missed!
  • In taking AP Econ, what did you not take?
  • Going out for a sport means…..
  • Buying a new outfit means…..

Basic Economic Questions

  • $100 gift certificate and a trip to Mayfair Mall!
  • Ever not buy something?
  • Ever regret a purchase?
  • Have a CD you hate?

Overview

  • Because we have unlimited wants but limited resources we have to make choices and understand that our choices come with a cost.
  • How do we get the greatest satisfaction for the lowest cost??
  • “The most bang for the buck!”

I. What is Economics cont…

  • D. Marginal
  • 1. Economics seeks to compare the marginal benefit to the marginal cost.
  • 2. Marginal = Additional or extra.
  • (More commonly; is it worth it? Is the added effort worth the benefit you will receive both individually and in society.)

An example -

  • Needed – 3 volunteers.
  • You get to eat.

Do you think like an Economist – Yet??

  • Can the government provide too much financial aid???
  • What should you consider?
  • Costs=
  • Benefits=
  • How do you measure it?
  • That’s what the class is about.

II. Why Study Economics

  • A. Economics has replaced politics as the avenue toward freedom.
  • 1. Economics dominates political decisions.
  • B. It will help you make better financial decisions.
  • Academic not Vocational –
  • Accounting = Vocational
  • Academic = the skills to run a business better

III. Broad Economic Goals

  • A. 8 Widely accepted goals of USA
  • 1. Growth – Higher Standard of Living
  • 2. Full Employment – Provide jobs for all citizens willing and able to work.
  • 3. Efficiency – maximum fulfillment of wants with all available resources.
  • 4. Price-level stability – avoid large swings in prices (inflation /deflation)
  • 5. Freedom – allow for choices.
  • 6. Equitable distribution of income – poverty v. wealth.
  • 7. Security – provide for those unable to provide for themselves.
  • 8. Balance of Trade – keep a reasonable balance of goods and financial transactions.
  • B. Debatable, complementary, and may involve trade-offs.

End of Chapter 1

  • Economics Defined
  • Unlimited wants vs. limited resources.
  • Scarcity leads to choice.
  • Choice is made by evaluating what is going to give the most satisfaction for the lowest cost.
  • Bonus for chapter 1 work Tuesday September 13.
  • Macro Outline
  • AP Macro Outline – 2005-2006
  •  
  • I.                    Basic economic concepts 8 – 12 %
  • Chapters 1, 2, 3, 4, 5 & parts of 20
  • A.     Scarcity, choice and opportunity costs
  • B.     Production possibilities curve
  • C.     Comparative advantage, specialization and exchange
  • D.     Demand, supply, and market equilibrium
  • E.      Macroeconomic issues: business cycle, unemployment, inflation, growth
  •  
  •  
  • II. Measurement of economic performance 12 – 16 %
  • Chapters 4, 5, 7, 8
  • A.     National Income Accounts (4-6%)
  • 1.      Circular flow
  • 2.      Gross Domestic Product
  • 3.      Components of GDP
  • 4.      Real versus Nominal GDP
  • B.     Inflation measurement and adjustment (4-5%)
  • 1.      Price indices
  • 2.      Nominal versus real values
  • 3.      Costs of inflation
  • C.     Unemployment (4-5%)
  • 1.      Definition and measurement
  • 2.      Types of unemployment
  • 3. Natural rate of unemployment
  • Do you think like an economist yet?
  • Let’s See

Chapter 2

  • I. The Economizing problem.
  • A. Society’s material wants are unlimited yet resources are scarce?
  • 1. On the one hand we deal with the desires of consumers.
  • 2. Consumers seek those items that give them the greatest utility (pleasure/satisfaction).
  • 3. Business and Gov’t also have wants such as satisfying production goals or helping the citizenry.
  • BUT LIMITED OR SCARCE
  • PRODUCTIVE RESOURCES!
  • THE FOUNDATION OF ECONOMICS
  • SOCIETY HAS VIRTUALLY
  • UNLIMITED WANTS....

Wants????

  • Food, Clothing, and Shelter
  • Cars, Concerts, and CD’s
  • Primary v Secondary Wants
  • Different people?
  • Different nations?
  • Different wants?
  • Want's are UNLIMITED!

I. The economizing problem cont…

  • 4. On the other hand we deal with all of the natural, human and manufactured resources.
  • B. Resource Categories
  • 1. Land – All gifts of nature.
  • 2. Capital – machinery, tools etc…
  • 3. Labor – physical and mental talents of individuals.

I. The economizing problem cont…

  • 4. Entrepreneurial Ability – an innovator who takes the risk of trying to produce new products, new techniques, or forms of business organizations.
  • Try to remember CELL

Resource Categories

  • Land
  • Labor
  • Capital (is not money but
  • is new machines and factories)
  • Entrepreneurial
  • Skills
  • Resources are LIMITED!
  • (CELL – a pneumatic device)

I. The economizing problem cont…

  • C. Resource markets
  • 1. The place where resources or the services of resource suppliers are bought and sold.
  • 2. Business demands the 4 categories of resources to make their goods and services.
  • 3. In return business must pay for those resources.
  • 4. Those resource payments are in the form of Rent, Interest, Wages and Profits/losses. (weasel puss is red!)
  • Business/Owners
  • Decisions based on…$$$
  • LAND
  • CAPITAL
  • LABOR
  • RENT
  • INTEREST
  • WAGES
  • ENTREPRENEUR
  • PROFIT &
  • LOSS
  • 5.

Simple Circular Flow Page 37 in book.

  • Circular Flow Model
  • BUSINESSES
  • Circular Flow Model
  • BUSINESSES
  • HOUSEHOLDS
  • Circular Flow Model
  • RESOURCE
  • MARKET
  • RESOURCES
  • INPUTS
  • BUSINESSES
  • HOUSEHOLDS
  • Circular Flow Model
  • RESOURCE
  • MARKET
  • RESOURCES
  • INPUTS
  • $ COSTS
  • $ INCOMES
  • BUSINESSES
  • HOUSEHOLDS
  • LUXURIES vs. NECESSITIES
  • Secondary vs. Primary Wants
  • Consumer Choices are based on...
  • UTILITY or Opportunity cost
  • Circular Flow Model
  • RESOURCE
  • MARKET
  • RESOURCES
  • INPUTS
  • $ COSTS
  • $ INCOMES
  • PRODUCT
  • MARKET
  • GOODS &
  • SERVICES
  • GOODS &
  • SERVICES
  • BUSINESSES
  • HOUSEHOLDS
  • Circular Flow Model
  • BUSINESSES
  • HOUSEHOLDS
  • RESOURCE
  • MARKET
  • RESOURCES
  • INPUTS
  • $ COSTS
  • $ INCOMES
  • PRODUCT
  • MARKET
  • GOODS &
  • SERVICES
  • GOODS &
  • SERVICES
  • $ CONSUMPTION
  • $ REVENUE

How Does an Economy Work?

  • The Circular Flow Model
  • 1995 Essay:
  • Draw, Label, & Explain the Circular Flow!

7. Full vs. Allocative Efficiency

  • Full – using resources and producing goods in the least costly way.
  • Allocative – using the resources and producing goods in the least cost way but also how society deems appropriate.
  • II. How do nations decide how to best use those resources?
  • A. 3 Basic Questions for any nation:
  • What?
  • How?
  • For Whom?
  • To answer these questions, economic systems were created.
  • These economic systems vary greatly in how they use their scarce resources.
  • In the USA we used our scarce resources to produce $29,000 per person of goods and services.
  • In Zambia scarce resources were used to produce $900 per person of goods and services.

B. Economic Systems

  • 1. Traditional
  • 2. Command
  • 3. Market
  • 4. Mixed
  • Each system answers: what, how, and for whom differently.

Economic v Political Systems

  • All nations fall economically into Traditional, Command, Market, or Mixed systems
  • Nations politically can be Capitalist, Socialist, Communist, Dictatorship, or Fascist

C. Traditional Systems

  • 1. Barter System
  • 2. Low Productivity
  • 3. Third World Countries
  • Saukville

D. Command Systems

  • 1. Government controls the economy
  • 2. Government determines:
    • What to produce
    • Who will produce it
    • How it will be produced
    • For whom it will be produced

E. Market Systems

  • 1. Laissez Faire role of government
  • 2. Private ownership of the means of production
  • 3. Markets determine price and allocate resources

F. Mixed Economic Systems

  • 1. Most national economies today
  • 2. Market economies dominate with varying degrees of government regulation and manipulation.

Goals of Macroeconomists:

  • Economic Growth
  • Stable Prices
  • Full Employment

“ISMS”

  • Capitalism
  • Socialism
  • Communism
  • Imperialism
  • Nationalism
  • Fascism
  • Nazism

Capitalist Systems - USA

  • Limited role of government
  • Private ownership of the means of production
  • Markets determine price and allocate resources

Socialist Systems

  • An expanded role of government
  • Government & Private ownership of the means of production
  • Government & Markets determine price and allocate resources
  • In most European countries
  • & in Canada health care is
  • PROVIDED by the Government.
  • Governments own and run airlines
  • and railroads in some countries too!

Communist Systems

  • Government controls the economy
  • Government determines:
    • What to produce
    • Who will produce it
    • How it will be produced
    • For whom it will be produced

Imperialism v. Nationalism

  • Nationalism is waving the flag and being patriotic!
  • Imperialism is planting the flag in another country and claiming it for political or economic gain!

Dictatorships

  • Mussolini’s Fascism
    • Control government
    • Control the economy
    • Allow some freedoms
  • Hitler’s Nazism
    • Total control of a person’s life
    • Total control of the nation

A Quick Check

  • Answer T for traditional, C for Command or M for Market.
  • 1. This economy has no money in its exchanges.
  • 2. In this economy consumers decide what will be produced.
  • 3. In this economy, government decides what will be produced.
  • 4. In this economy, government has only a minor role.
  • 5. This economy sees the greatest potential for productivity.
  • 6. J. Stalin, A. Hitler, F. Castro A. Hilts use this system today.
  • 7. In this economy the people decide who will receive the goods produced by using money.
  • 8. The pilgrims
  • 9. Airbags and seat belts
  • 10. McRib, Mcgrafton
  • Take a look at the first three questions for your chapter two homework. You should be able to answer them.

Production Possibility Curves

  • Understanding Efficiency and Choice

III. PPC Curves

  • A. Simplistic way of illustrating the consequences of choice in an economy.
  • B. 4 Assumptions
  • 1. Full employment and productive efficiency.
  • 2. Fixed resources.
  • 3. Fixed Technology
  • 4. Two goods – consumer goods and capital goods.
  • C. A PPC table lists the different combinations of two products that can be produced with limited resources.
  • D. A PPC curve is a 2 dimensional graph of the goods.
  • PRODUCTION POSSIBILITIES
  • Assumes....
  • Efficiency
  • Fixed Resources
  • Fixed Technology
  • Two Products
  • PIZZA
  • for example...
  • for example...
  • PRODUCTION POSSIBILITIES
  • Assumes....
  • Efficiency
  • Fixed Resources
  • Fixed Technology
  • Two Products
  • ROBOT ARMS
  • What if we could only produce ...
  • 10,000 Robot Arms
  • or
  • PRODUCTION POSSIBILITIES
  • What if we could only produce ...
  • 10,000 Robot Arms
  • or
  • 400,000 Pizzas
  • PRODUCTION POSSIBILITIES
  • Using all of our resources, to
  • get some pizza, we must give
  • up some robot arms!
  • for example...
  • What if we could only produce ...
  • 10,000 Robot Arms
  • or
  • 400,000 Pizzas
  • PRODUCTION POSSIBILITIES
  • PIZZA 0 1 2 3 4
  • (in hundred thousands)
  • Robots 10 9 7 4 0
  • (in thousands)
  • in table form
  • PRODUCTION POSSIBILITIES
  • PIZZA 0 1 2 3 4
  • (in hundred thousands)
  • Robots 10 9 7 4 0
  • (in thousands)
  • in table form
  • in graphical form
  • Robots
  • (thousands)
  • Pizzas (hundred thousands)
  • PRODUCTION POSSIBILITIES
  • PIZZA 0 1 2 3 4
  • (in hundred thousands)
  • Robots 10 9 7 4 0
  • (in thousands)
  • in table form
  • in graphical form
  • Robots
  • (thousands)
  • PRODUCTION POSSIBILITIES
  • Pizzas (hundred thousands)
  • PIZZA 0 1 2 3 4
  • (in hundred thousands)
  • Robots 10 9 7 4 0
  • (in thousands)
  • in table form
  • in graphical form
  • Robots
  • (thousands)
  • PRODUCTION POSSIBILITIES
  • Pizzas (hundred thousands)
  • PIZZA 0 1 2 3 4
  • (in hundred thousands)
  • Robots 10 9 7 4 0
  • (in thousands)
  • in table form
  • in graphical form
  • Robots
  • (thousands)
  • PRODUCTION POSSIBILITIES
  • Pizzas (hundred thousands)
  • PIZZA 0 1 2 3 4
  • (in hundred thousands)
  • Robots 10 9 7 4 0
  • (in thousands)
  • in table form
  • in graphical form
  • Robots
  • (thousands)
  • PRODUCTION POSSIBILITIES
  • Pizzas (hundred thousands)
  • PIZZA 0 1 2 3 4
  • (in hundred thousands)
  • Robots 10 9 7 4 0
  • (in thousands)
  • in table form
  • in graphical form
  • Robots
  • (thousands)
  • PRODUCTION POSSIBILITIES
  • Pizzas (hundred thousands)

III. PPC Curves cont…

  • E. If an economy is at full employment and full efficiency it must sacrifice some of one good in order to get more of another good.
  • F. The amount of other products that must be sacrificed to obtain additional units of another good is the – OPPORTUNITY COST!
  • PIZZA 0 1 2 3 4
  • (in hundred thousands)
  • Robots 10 9 7 4 0
  • (in thousands)
  • in table form
  • in graphical form
  • Robots
  • (thousands)
  • PRODUCTION POSSIBILITIES
  • Pizzas (hundred thousands)

III. PPC Curves cont…

  • 1. Law of increasing opportunity costs - the opportunity cost of each additional unit is greater than the previous one.
  • - When you continue to add to Pizzas it is going to cost you marginally more in robots.
  • - why? – it is not an equal trade off. There comes a point when transfer of resources is more costly than an equal trade off.
  • - That is why PPC curves are concave.
  • - Converting capital goods or military good to consumer goods is not an equal trade off.
  • PIZZA 0 1 2 3 4
  • (in hundred thousands)
  • Robots 10 9 7 4 0
  • (in thousands)
  • in table form
  • in graphical form
  • Robots
  • (thousands)
  • PRODUCTION POSSIBILITIES
  • Pizzas (hundred thousands)
  • Total versus Marginal
  • Opportunity costs.
  • PRODUCTION POSSIBILITIES
  • Limited Resources means
  • a limited output....
  • At any point in time, a full-
  • employment, full-production
  • economy must sacrifice some
  • of product X to obtain more
  • of product Y.
  • PRODUCTION POSSIBILITIES
  • Q
  • Q
  • Robots (thousands)
  • Pizzas (hundred thousands)
  • 14
  • 13
  • 12
  • 11
  • 10
  • 9
  • 8
  • 7
  • 6
  • 5
  • 4
  • 3
  • 2
  • 1
  • 1 2 3 4 5 6 7 8
  • PRODUCTION POSSIBILITIES
  • A
  • B
  • C
  • D
  • E
  • W
  • Attainable
  • but
  • Inefficient
  • Unattainable
  • Attainable and
  • efficient
  • Allocative
  • Efficiency
  • 1. Society
  • must
  • decide
  • on some
  • point
  • along
  • the frontier
  • MB = MC
  • Q
  • Q
  • Robots (thousands)
  • Pizzas (hundred thousands)
  • 14
  • 13
  • 12
  • 11
  • 10
  • 9
  • 8
  • 7
  • 6
  • 5
  • 4
  • 3
  • 2
  • 1
  • 1 2 3 4 5 6 7 8
  • PRODUCTION POSSIBILITIES
  • A
  • B
  • C
  • D
  • E
  • W
  • Attainable
  • but
  • Inefficient
  • Unattainable
  • Attainable and
  • efficient
  • Notes....
  • The amount of other
  • products which must be
  • forgone or sacrificed to obtain some amount of a specific product is called the opportunity cost of that good.
  • LAW OF INCREASING
  • OPPORTUNITY COSTS
  • Q
  • Q
  • Robots (thousands)
  • Pizzas (hundred thousands)
  • 14
  • 13
  • 12
  • 11
  • 10
  • 9
  • 8
  • 7
  • 6
  • 5
  • 4
  • 3
  • 2
  • 1
  • 1 2 3 4 5 6 7 8
  • PRODUCTION POSSIBILITIES
  • A
  • B
  • C
  • D
  • E
  • W
  • Attainable
  • but
  • Inefficient
  • Unattainable
  • Attainable and
  • efficient
  • Notes....
  • This means that a graph of
  • the production possibilities
  • curve will be CONCAVE - bowed out from the origin.
  • LAW OF INCREASING
  • OPPORTUNITY COSTS
  • Q
  • Q
  • Robots (thousands)
  • Pizzas (hundred thousands)
  • 14
  • 13
  • 12
  • 11
  • 10
  • 9
  • 8
  • 7
  • 6
  • 5
  • 4
  • 3
  • 2
  • 1
  • 1 2 3 4 5 6 7 8
  • PRODUCTION POSSIBILITIES
  • A
  • B
  • C
  • D
  • E
  • W
  • Attainable
  • but
  • Inefficient
  • Unattainable
  • Attainable and
  • efficient
  • Notes....
  • This means that a graph of
  • the production possibilities
  • curve will be CONCAVE - bowed out from the origin.
  • Economic resources are
  • not completely adapt-
  • able to other uses.
  • LAW OF INCREASING
  • OPPORTUNITY COSTS
  • Q
  • Q
  • Robots (thousands)
  • Pizzas (hundred thousands)
  • 14
  • 13
  • 12
  • 11
  • 10
  • 9
  • 8
  • 7
  • 6
  • 5
  • 4
  • 3
  • 2
  • 1
  • 1 2 3 4 5 6 7 8
  • PRODUCTION POSSIBILITIES
  • U
  • Unemployment &
  • Underemployment
  • Shown by Point U
  • Unemployment
  • and under-
  • utilization of
  • resources.
  • Shown inside
  • the curve.
  • PRODUCTION POSSIBILITIES
  • Q
  • Q
  • Capital Goods
  • Consumer Goods
  • A
  • B
  • a
  • Economic Limits
  • Along
  • PPC Frontier
  • PRODUCTION POSSIBILITIES
  • Economic Growth
  • Q
  • Q
  • A
  • B
  • C
  • D
  • a
  • b
  • Capital Goods
  • Consumer Goods
  • I. Growth
  • brought on
  • by an
  • increase in
  • resource
  • supplies
  • or advances
  • in technology.
  • Shifts the
  • Curve to the
  • Right.
  • 12
  • 10
  • 8
  • 6
  • 4
  • 2
  • 0
  • 2 4 6 8 10 12
  • PPC – Constant Cost Graph
  • 12
  • 10
  • 8
  • 6
  • 4
  • 2
  • 0
  • 2 4 6 8 10 12
  • What if the Axis's
  • Were labeled wheat & oil?
  • PPC – Constant Cost Graph
  • Quantity of Wheat
  • In tons
  • Quantity of Oil
  • In millions of barrels
  • What is this now an
  • Output or Input PPC?
  • Output!
  • 12
  • 10
  • 8
  • 6
  • 4
  • 2
  • 0
  • 2 4 6 8 10 12
  • PPC – Constant Cost Graph of
  • Outputs
  • Quantity of Wheat
  • In tons
  • Quantity of Oil
  • In millions of barrels
  • 12
  • 10
  • 8
  • 6
  • 4
  • 2
  • 0
  • 2 4 6 8 10 12
  • PPC – What happens if output increases?
  • Quantity of Wheat
  • In tons
  • Quantity of Oil
  • In millions of barrels
  • PRODUCTION POSSIBILITIES
  • Assumes....
  • Efficiency
  • PRODUCTION POSSIBILITIES
  • Assumes....
  • Efficiency
  • Fixed Resources
  • PRODUCTION POSSIBILITIES
  • Assumes....
  • Efficiency
  • Fixed Resources
  • Fixed Technology
  • PRODUCTION POSSIBILITIES
  • Assumes....
  • Efficiency
  • Fixed Resources
  • Fixed Technology
  • FULL EMPLOYMENT
  • STABLE PRICES
  • ECONOMIC GROWTH
  • PRODUCTIVE EFFICIENCY
  • The Role of Government
  • PRODUCTION POSSIBILITIES
  • Assumes....
  • Efficiency
  • Fixed Resources
  • Fixed Technology
  • Q
  • Q
  • Robots (thousands)
  • Pizzas (hundred thousands)
  • 14
  • 13
  • 12
  • 11
  • 10
  • 9
  • 8
  • 7
  • 6
  • 5
  • 4
  • 3
  • 2
  • 1
  • 1 2 3 4 5 6 7 8
  • PRODUCTION POSSIBILITIES
  • U
  • Unemployment &
  • Underemployment
  • Shown by Point U
  • More of either or
  • both is possible
  • Q
  • Q
  • Robots (thousands)
  • Pizzas (hundred thousands)
  • 14
  • 13
  • 12
  • 11
  • 10
  • 9
  • 8
  • 7
  • 6
  • 5
  • 4
  • 3
  • 2
  • 1
  • 1 2 3 4 5 6 7 8
  • PRODUCTION POSSIBILITIES
  • Notes....
  • ECONOMIC GROWTH
  • The ability to produce
  • a larger total output -
  • a rightward shift of
  • the production
  • possibilities curve caused by...
  • Q
  • Q
  • Robots (thousands)
  • Pizzas (hundred thousands)
  • 14
  • 13
  • 12
  • 11
  • 10
  • 9
  • 8
  • 7
  • 6
  • 5
  • 4
  • 3
  • 2
  • 1
  • 1 2 3 4 5 6 7 8
  • PRODUCTION POSSIBILITIES
  • Notes....
  • 1 - Increases in
  • resources -
  • 2 - Better resource
  • quality -
  • 3 - Technological
  • progress
  • ECONOMIC GROWTH
  • Economic Growth
  • Q
  • Q
  • Robots (thousands)
  • Pizzas (hundred thousands)
  • 14
  • 13
  • 12
  • 11
  • 10
  • 9
  • 8
  • 7
  • 6
  • 5
  • 4
  • 3
  • 2
  • 1
  • 1 2 3 4 5 6 7 8
  • A’
  • B’
  • C’
  • D’
  • E’
  • PRODUCTION POSSIBILITIES
  • Two Examples of Economic Growth
  • FAVORING
  • PRESENT GOODS
  • CURRENT
  • CURVE
  • FUTURE
  • CURVE
  • CONSUMPTION
  • PRODUCTION POSSIBILITIES
  • Goods for the Present
  • Two Examples of Economic Growth
  • Goods for the Present
  • Goods for the Present
  • Goods for the Future
  • Goods for the Future
  • FAVORING
  • PRESENT GOODS
  • FAVORING
  • FUTURE GOODS
  • CURRENT
  • CURVE
  • FUTURE
  • CURVE
  • FUTURE
  • CURVE
  • CONSUMPTION
  • CONSUMPTION
  • PRODUCTION POSSIBILITIES
  • CURRENT
  • CURVE

Basic Review – Chapter 2

  • 5 point Bonus Chapter 1 for Monday 9/13; 10 Point Bonus Chapter 2 Wednesday 9/15
  • Unlimited wants v limited resources
  • Primary v Secondary
  • Land, Labor, Capital, Entrepreneurial
  • Choice
  • Scarcity
  • Opportunity Cost
  • Absolute & Comparative Advantage
  • What, How, and For Whom
  • Economic Systems: Traditional, Command, Market, and Mixed
  • Construction of a Circular Flow & PPC curves
  • Efficiency????
  • Applications....
  • Wartime Production
  • Discrimination
  • Land-Use Controversies
  • Destruction from War
  • Growth: Japan vs. United States
  • Famine in Africa
  • Emerging Technologies
  • PRODUCTION POSSIBILITIES

On the back of your quiz:

  • Draw a simple circular flow with Households & Businesses, The Factor Market with CELL & WPiR, & the Product Market with Goods & Services and Cash Flow.
  • Draw and Label PPC curves on a single graph for Pesto and Pasta Lands labeling: Absolute Advantage(AA) and Comparative Advantage(CA)
    • Pesto land produces 40 Lasagna and 20 Pizzas
    • Pasta land produces 30 Lasagna and 30 Pizzas

The Macro Economy

  • Consumer Purchases
  • Business Investments
  • Government Purchases
  • Exports
  • Imports
  • GDP = C + I + G + X – M (demand side)
  • GDP = W + i + R + P + Inbt + Dep (income side)


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