Microeconomics

Only available on StudyMode
  • Download(s) : 50
  • Published : October 23, 2012
Open Document
Text Preview
IB/AP Economics Unit 1 Introduction to Economics

Introduction to Economics
AP and IB Economics Unit 1
Definitions of social science and economics Definitions of microeconomics and macroeconomics Definitions of growth, development and sustainable development Positive and normative concepts Ceteris paribus Scarcity • factors of production: land, labor, capital and management/entrepreneurship • payments to factors of production: rent, wages, interest, profit Choice Utility: basic definition Opportunity cost • Free and economic goods • Production possibility curves: definition >>diagrams showing opportunity cost, actual and potential output >>diagrams showing economic growth and economic development Rationing systems • basic economic questions >>what to produce? >>how to produce? >>for whom to produce? • mixed economies >>public >>private >>central planning vs. free market >>economies in transition

Welker's Wikinomics ­ www.welkerswikinomics.com

1

IB/AP Economics Unit 1 Introduction to Economics

Introduction to Economics
What is Economics?

Question: What "law of nature" does the science of aerospace engineering attempt to overcome? Answer:

gravity

Question: What "law of nature" does the science of economics attempt to overcome? Answer:

scarcity
The Basic Economic Problem:

Humans' wants and needs are infinite, while the resources needed to satisfy those wants and needs are limited and scarce.

Welker's Wikinomics ­ www.welkerswikinomics.com

2

IB/AP Economics Unit 1 Introduction to Economics

Introduction to Economics
What is Economics?

Scarcity - definition: something is scarce when it is both desirable and limited. Not all goods are scarce. Some goods that humans consume are infinite... Place the following words under the correct category, Scarce or Not Scarce

Scarce

or
Murderers Computers Swiss francs factory workers Water HIV Oxygen Mosquitos British Pounds Doctors Creativity Nitrogen Sewing machines Diamonds Worms Happiness Apartments in Zurich Love Clouds Teachers Dirt Football players Air

not scarce?

Welker's Wikinomics ­ www.welkerswikinomics.com

3

IB/AP Economics Unit 1 Introduction to Economics

Introduction to Economics
What is Economics?

Your first economics riddle: The Diamond/Water Paradox
Something to think about: • Nobody needs diamonds, yet they are EXTREMELY EXPENSIVE • Everybody needs water, yet it is EXTREMELY CHEAP

Why are diamonds so expensive?

Why is water so cheap?

Welker's Wikinomics ­ www.welkerswikinomics.com

4

IB/AP Economics Unit 1 Introduction to Economics

Introduction to Economics
What is Economics?

Free goods and economics goods
What is meant by "goods" in economics? • Goods are...
• Haircuts, cars, toothbrushes, TVs, movies, happiness, shoes, vacations, friendship, hamburgers, love, jewelry, education, air (to breathe, duh!), fresh water, public transportation, sunshine, etc... Some goods are ECONOMIC goods: Scarce resources are used in the production of economic goods. Some goods are FREE goods: The resources used in the production of free goods are NOT scarce. Usually, free goods are those things you enjoy that you don't have to pay for!

the stuff people WANT because it make us feel GOOD!

From the list above, identify which are FREE and which are ECONOMICS goods

Free goods

or

Economic goods

Welker's Wikinomics ­ www.welkerswikinomics.com

5

IB/AP Economics Unit 1 Introduction to Economics

Introduction to Economics
Do you think like an Economist?

Answer the questions to the best of your ability. Discuss with a classmate if you become stumped. T  T T  T  T  T  T  T  T  T  F  F  F  F F  F  F  F  F  F  Because it is desirable, sunshine is scarce. Because it is limited, polio is scarce. Because water covers three­fourths of the earth's surface and is  renewable, it cannot be considered scarce. The main cost of going to college is tuition, room and board....
tracking img