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Topic 1: Introduction to Economics

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Assignment 1. Welcome to Economics

Learning Objectives

At the end of the lesson student will be able to:

• Understand the importance of studying economics and define what study economics

• Explain the relationship between production and division of labor

• Evaluate the significance of scarcity

• Define microeconomics and macroeconomics

• Explain the importance of economic theories and models

• Contrast traditional economies, command economies, and market economies

Main Contents

1. What Is Economics, and Why Is It Important?

a. Discuss the importance of studying economics

b. Explain the relationship between production and division of labor

c. Evaluate the significance of scarcity

2. Microeconomics and Macroeconomics

a. Describe microeconomics

b. Describe macroeconomics

3. How Economists Use Theories and Models to Understand Economic Issues

a. Interpret a circular flow diagram

b. Explain the importance of economic theories and models

c. Describe goods and services markets and labor markets

4. How Economies Can Be Organized: An Overview of Economic Systems

a. Contrast traditional economies, command economies, and market economies

Resources

• social science /Economics/ Chapter 1, pages 9-25.

• McConnell, Campbell; Brue, Stanley; and Flynn, Sean; “Economics, Principles, Problems, and Policies”. 18th Edition, New York, 2009), students will read the chapters 1 “Limits, Alternatives, and Choices” (pages 3-10).

• “Adam Smith” (1723-1790) / and one of the other recommended reading. They will extend your understanding of why the term “Division of Labor” is important in economics.

• “What is Economics?” University of Bristol.

• . “What Is Economics? Introduction”. Library of Economics and Liberty.

• Required Reading. “Adam Smith” (1723-1790) /

• Recommended Reading. “David Ricardo” (1772-1823)

• Recommended Reading. “Division of Labor” by Michael Munger.

• ECO LOWN DOWN /

• Ray, Margaret; and Anderson, David. “Krugman’s Macroeconomics for AP”. Worth Publishers/BFW, 2011

• Anderson, David. “Economics by Examples”. Worth Publishers/BFW, 2007

Online Resources

• OpenStax College. Principles of Economics

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Vocabulary and Key Terms

• Economics. The core of Economics

• Microeconomics

• Macroeconomics

• Other-things-equal assumption/ ceteris paribus

• Economic resources/ Factors of Production

• Positive versus Normative Economics

• Circular flow diagram

• Command economy

• Market economy

• Traditional economy

• Underground economy

Division of labor / Specialization

Study questions

1. What Is Economics, and Why Is It Important? What are three reasons to study economics?

2. Explain the following statement: “Microeconomics and Macroeconomics are two different perspectives on the economy”. Mention the difference between microeconomics and macroeconomics.

3. Indicate whether each of the following statements applies to microeconomics or macroeconomics:

a. The unemployment rate in the United States was 4.9 percent in January 2008.

b. A U.S. software firm discharged 15 workers last month and transferred the work to India.

c. An unexpected freeze in central Florida reduced the citrus crop and caused the price of oranges to rise.

d. U.S. output, adjusted for inflation, grew by 2.2 percent in 2007.

e. Last week Wells Fargo Bank lowered its interest rate on business loans by one-half of 1 percentage point. f. The consumer price index rose by 2.8 percent in 2007.

4. State (a) a positive economic statement of your choice, and then (b) a normative economic statement relating to your first statement.

5. How do Economists use theories and models to understand economic issues?

6. What are the three main goals of macroeconomics?

7. What is scarcity? Can you think of two causes of scarcity?

8. Can you think of any examples of free goods, that is, goods or services that are not scarce?

9. What are economic resources? What categories do economists use to classify them? Why resources are also called factors of production? Why are they called inputs?

10. Draw a circular flow diagram.

11. Are households primarily buyers or sellers in the goods and services market? In the labor market?

12. Are firms primarily buyers or sellers in the goods and services market? In the labor market?

13. Give the three reasons that explain why the division of labor increases an economy’s level of production. Why would division of labor without trade not work?

14. What are the three ways that societies can organize themselves economically?

15. Contrast how a market system and a command economy try to cope with economic scarcity.

16. Why do you think that most modern countries’ economies are a mix of command and market types?

Home Learning

Writing a paper review

a. Visit

b. Click on Social Sciences → Principles of Economics → Download a PDF version of the book. Save a copy in your own computer.

c. Visit this website () to read about how the United States is dealing with scarcity in resources (“How 10 Western Cities Are Dealing with Water Scarcity and Drought”).

d. Write a paper review. You will write four short paragraphs addressing the following points.

• Description of the work

• Your opinion of the whole work: Did you like the article? Why or why not? Use examples to bolster your statements.

• How could you explain the relationship between scarcity and the necessity of making choices in your context?

Long reviews are not necessarily good reviews. Please limit your review to one page at most. In terms of length, about 400 to 600 words. Follow an appropriate format (name, panther ID, and title)

ECON Lowdown: . Log in as a STUDENT by using the information you are receiving via e-mail (Student Code and Password). Take the course “Once upon a Decision”. The Post-Test score will count as a quiz grade.

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