CHAPTER 1 - THE ART AND SCIENCE OF ECONOMIC ANALYSIS
CHAPTER 1 - THE ART AND SCIENCE OF ECONOMIC ANALYSIS (6e)
I. The Economic Problem
Scarce resources v. unlimited wants
ECONOMICS:
A. Resources
1) Categories of resources
a) Labor
b) Capital
c) Land
d) Entrepreneurial ability
2) Payments to resource owners
a) Wages for labor
b) Interest for capital
c) Rent for land
d) Profit for entrepreneurship
B. Goods and Services
Resources are combined to produce:
Goods
Services
C. Economic Decision Makers
1) Households (leading role)
2) Firms
3) Governments
4) The rest of the world
The economic decision makers interact by means of markets.
MARKET:
Product market
Resource market
D. A Simple Circular Flow Model
Circular flow model:
Study the diagram on p. 5; be sure you understand the flows of resources, products, and money between households and firms.
II. The Art of Economic Analysis
Study pp. 6-8 carefully on your own.
Focus on the meaning of marginal analysis (p. 7).
Understand the difference between microeconomics and macroeconomics (pp. 7-8).
III. The Science of Economic Analysis
Study pp. 8-16 carefully on your own.
Understand the concept of an economic theory or model (p. 8).
Know the difference between positive and normative economic statements (p. 10).
Point of interest: The Case Study on p. 14 and Exhibit 3 on p. 15 show the excellent earning potential for economics majors (male and female) compared to many other majors. If you would like to talk about economics as a possible major for you, please come by my office—I would be happy to discuss this with you!
APPENDIX TO CHAPTER 1 - UNDERSTANDING GRAPHS
Graph: a picture showing how variables relate
Components of a Graph:
See Ex. 4
Origin - represents zero value for both variables
Horizontal axis - measures values for the variable “x”
Vertical axis - measures values for the variable “y”
Note: It is often true that one variable depends on (i.e., is determined by) the other. For example, if the value of x depends on the value of y, then x is the dependent variable and y is the independent variable.
I. Drawing Graphs Based on the Relations Between Variables
A. Positive (Direct) Relation Between Variables
See Ex. 6, Ex. 7, and Ex. 8(a) for examples
B. Negative (Inverse) Relation Between Variables
See Ex. 8(b) for an example
C. Variables may the Independent (Unrelated)
See Ex. 8(c) and 8(d) for examples
II. Slopes of Straight Lines
Slope: how much the vertical axis variable’s value changes for a given change in the horizontal axis variable’s value
Slope = change in vertical axis value
change in horizontal axis value
Positive relation ( positive slope
See Ex. 8(a)
Negative relation ( negative slope
See Ex. 8(b)
Slope, Units of Measurement, and Marginal Analysis
and
IV. Slopes of Curved Lines
Read pp. 21-23. Know how to calculate slopes.
V. Line Shifts
See Ex. 12
END
................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.
Related download
- chapter 1 the art and science of economic analysis
- gce getting started pearson qualifications
- competence and commitment statements chartered engineer
- gce getting started
- preliminary economic concepts and principles
- competency examples with performance statements
- chapter 1 exam the nature of economics
- critique example journal article
- evaluation summary report
- example outcomes and outcome indicators
Related searches
- the role and functions of law
- the efficacy and effectiveness of treatment
- chapter 1 the nature of science
- state the equation and definition of photosynthesis
- the rise and fall of hitler
- the causes and consequences of the holocaust
- the trial and death of socrates pdf
- the trial and death of socrates free
- the pros and cons of social media
- the functions and characteristics of money
- chapter 1 the first americans
- influence the art and science of persuasion