Thinking-Like-an-Economi課件

1、Thinking Like an EconomistChapter 2Copyright 2001 by Harcourt, Inc.All rights reserved. Requests for permission to make copies of any part of thework should be mailed to:Permissions Department, Harcourt College Publishers,6277 Sea Harbor Drive, Orlando, Florida 32887-6777.Harcourt, Inc. items and de

2、rived items copyright 2001 by Harcourt, Inc.Every field of study has its own terminologyMathematicsaxiomsintegralsvector spacesPsychologyegoidcognitive dissonanceLawtortsvenuesPromissory estoppelHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Every field of study has its own t

3、erminologyEconomicsSupplyDemandElasticityConsumer SurplusComparative advantageOpportunity costDeadweight lossHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Economics trains you to. . . . uThink in terms of alternatives.uEvaluate the cost of individual and social choices.uExam

4、ine and understand how certain events and issues are related.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.The Economist as a ScientistThe economic way of thinking . . .uInvolves thinking analytically and objectively.uMakes use of the scientific method.Harcourt, Inc. items a

5、nd derived items copyright 2001 by Harcourt, Inc.The Scientific MethoduUses abstract models to help explain how a complex, real world operates.uDevelops theories, collects, and analyzes data to prove the theories.Observation, Theory and More Observation!Harcourt, Inc. items and derived items copyrig

6、ht 2001 by Harcourt, Inc.The Role of Assumptionsu Economists make assumptions in order to make the world easier to understand.u The art in scientific thinking is deciding which assumptions to make.u Economists use different assumptions to answer different questions.Harcourt, Inc. items and derived i

7、tems copyright 2001 by Harcourt, Inc.The Economic Way of ThinkinguIncludes developing abstract models from theories and the analysis of the models.uUses two approaches:uDescriptive (reporting facts, etc.)uAnalytical (abstract reasoning)Harcourt, Inc. items and derived items copyright 2001 by Harcour

8、t, Inc.Economic Modelsu Economists use models to simplify reality in order to improve our understanding of the worldu Two of the most basic economic models include:uThe Circular Flow ModeluThe Production Possibilities FrontierHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.The

9、 Circular-Flow ModelThe circular-flow model is a simple way to visually show the economic transactions that occur between households and firms in the economy.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.The Circular-Flow DiagramFirmsHouseholdsMarket for Factors of Productio

10、nMarket for Goods and ServicesSpendingRevenueWages, rent, and profitIncomeGoods & Services soldGoods & Services boughtLabor, land, and capitalInputs for productionHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.The Circular-Flow DiagramHouseholdsu Buy and consume goods and ser

11、vicesu Own and sell factors of productionFirmsu Produce and sell goods and servicesu Hire and use factors of productionHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.The Circular-Flow DiagramMarkets for Factors of Productionu Households sellu Firms buyMarkets for Goods & Serv

12、icesu Firms sellu Households buyHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.The Circular-Flow DiagramFactors of Productionu Inputs used to produce goods and servicesu Land, labor, and capitalHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.The Product

13、ion Possibilities FrontierThe production possibilities frontier is a graph showing the various combinations of output that the economy can possibly produce given the available factors of production and technology.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.The Production P

14、ossibilities FrontierQuantity ofComputersProducedQuantity ofCars Produced3,00001,0002,0007001,000300AB2,200600CDHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.The Production Possibilities FrontierQuantity ofComputersProducedQuantity ofCars Produced3,0001,0002,0002,200A7006003

15、0001,000BCDProductionpossibilitiesfrontierHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Concepts Illustrated by the Production Possibilities FrontieruEfficiencyuTradeoffsuOpportunity CostuEconomic GrowthHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.4

16、,000The Production Possibilities FrontierQuantity of ComputersProducedQuantity ofCars Produced3,0002,000A70001,000E2,100750An outward shift in the production possibilities frontierHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Microeconomics and MacroeconomicsuMicroeconomics

17、focuses on the individual parts of the economy.uHow households and firms make decisions and how they interact in specific marketsuMacroeconomics looks at the economy as a whole.uHow the markets, as a whole, interact at the national level.Harcourt, Inc. items and derived items copyright 2001 by Harco

18、urt, Inc.Two Roles of EconomistsuWhen they are trying to explain the world, they are scientists.uWhen they are trying to change the world, they are policymakers.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Positive versus Normative AnalysisuPositive statements are statement

19、s that describe the world as it is.uCalled descriptive analysisuNormative statements are statements about how the world should be.uCalled prescriptive analysisHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.?Positive or Normative Statements?An increase in the minimum wage will

20、 cause a decrease in employment among the least-skilled.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.?Positive or Normative Statements?Higher federal budget deficits will cause interest rates to increase.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc

21、.?Positive or Normative Statements?The income gains from a higher minimum wage are worth more than any slight reductions in employment.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.?Positive or Normative Statements?State governments should be allowed to collect from tobacco

22、companies the costs of treating smoking-related illnesses among the poor.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Economists in Washington . . . . . serve as advisers in the policymaking process of the three branches of government:uLegislativeuExecutiveuJudicialHarcourt

23、, Inc. items and derived items copyright 2001 by Harcourt, Inc.Why Economists DisagreeuThey may disagree on theories about how the world works.uThey may hold different values and, thus, different normative views. Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Examples of What

24、 Most Economists Agree OnuA ceiling on rents reduces the quantity and quality of housing available.uTariffs and import quotas usually reduce general economic welfare.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.SummaryuIn order to address subjects with objectivity, economic

25、s makes use of the scientific method. uThe field of economics is divided into two subfields: microeconomics and macroeconomics.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.SummaryuEconomics relies on both positive and normative analysis. Positive statements assert how the w

26、orld “is” while normative statements assert how the world “should be.”uEconomists may offer conflicting advice due to differences in scientific judgments or to differences in values.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Graphical ReviewHarcourt, Inc. items and derive

27、d items copyright 2001 by Harcourt, Inc.The Circular-Flow DiagramFirmsHouseholdsMarket for Factors of ProductionMarket for Goods and ServicesSpendingRevenueWages, rent, and profitIncomeLabor, land, and capitalInputs for productionGoods & Services soldGoods & Services boughtHarcourt, Inc. items and d

28、erived items copyright 2001 by Harcourt, Inc.The Production Possibilities FrontierQuantity ofComputersProducedQuantity ofCars Produced3,00001,0002,0007001,000300AB2,200600CDHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.The Production Possibilities FrontierQuantity ofComputer

29、sProducedQuantity ofCars Produced3,0001,0002,0002,200A70060030001,000BCDProductionpossibilitiesfrontierHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.The Production Possibilities Frontier4,000Quantity of ComputersProducedQuantity ofCars Produced3,0002,000A70001,000E2,100750An

30、 outward shift in the production possibilities frontierHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Interdependence and the Gains from TradeChapter 3Copyright 2001 by Harcourt, Inc.All rights reserved. Requests for permission to make copies of any part of thework should be

31、mailed to:Permissions Department, Harcourt College Publishers,6277 Sea Harbor Drive, Orlando, Florida 32887-6777.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Interdependence and Trade Consider your typical day:uYou wake up to an alarm clock made in Korea.uYou pour yourself

32、some orange juice made from oranges grown in Florida.uYou put on some clothes made of cotton grown in Georgia and sewn in factories in Thailand.uYou watch the morning news broadcast from New York on your TV made in Japan.uYou drive to class in a car made of parts manufactured in a half-dozen differe

33、nt countries. and you havent been up for more than two hours yet!Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Interdependence and TradeRemember, economics is the study of how societies produce and distribute goods in an attempt to satisfy the wants and needs of its members.

34、Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.How do we satisfy our wants and needs in a global economy?uWe can be economically self-sufficient.uWe can specialize and trade with others, leading to economic interdependence.Harcourt, Inc. items and derived items copyright 2001

35、 by Harcourt, Inc.Interdependence and TradeA general observation . . .Individuals and nations rely on specialized production and exchange as a way to address problems caused by scarcity.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Interdependence and TradeBut, this gives ri

36、se to two questions:uWhy is interdependence the norm?uWhat determines production and trade?Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Why is interdependence the norm?Interdependence occurs because people are better off when they specialize and trade with others.Harcourt,

37、Inc. items and derived items copyright 2001 by Harcourt, Inc.What determines the pattern of production and trade?Patterns of production and trade are based upon differences in opportunity costs.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.uImagine . . .only two goods: potat

38、oes and meatonly two people: a potato farmer and a cattle rancheruWhat should each produce?uWhy should they trade?A Parable for the Modern EconomyHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.The Production Opportunities of the Farmer and the RancherHours Needed to Make 1 lb

39、. of:Amount Produced in 40 HoursMeat PotatoesMeat PotatoesFarmer20 hours/lb 10 hours/lb2 lbs. 4 lbs.Rancher1 hours/lb 8 hours/lb.40 lbs. 5 lbs.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Self-SufficiencyBy ignoring each other:uEach consumes what they each produce.uThe prod

40、uction possibilities frontier is also the consumption possibilities frontier.Without trade, economic gains are diminished.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Production Possibilities FrontiersPotatoes (pounds)Meat (pounds)4212(a) The Farmers Production Possibilitie

41、s Frontier0AHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Production Possibilities FrontiersPotatoes (pounds)Meat (pounds)540202.5(b) The Ranchers Production Possibilities Frontier0BHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.The Farmer and the Ran

42、cher Specialize and Trade Each would be better off if they specialized in producing the product they are more suited to produce, and then trade with each other.uThe farmer should produce potatoes. uThe rancher should produce meat.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc

43、.The Gains from Trade: A SummaryThe OutcomeWithout Trade:What They Produceand ConsumeFarmer1 lb meat (A)2 lbs potatoesRancher20 lbs meat (B)2.5 lbs potatoesHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.The Gains from Trade: A SummaryThe OutcomeWith Trade:What TheyProduceWhat

44、 TheyTradeWhat TheyConsumeFarmer0 lbs meat 4 lbs potatoesGets 3 lbs meatfor 1 lb potatoes3 lbs meat (A*)3 lbs potatoesRancher24 lbs meat 2 lbs potatoesGives 3 lbs meatfor 1 lb potatoes21 lbs meat (B*)3 lbs potatoesHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Trade Expands t

45、he Set of Consumption PossibilitiesPotatoes (pounds)Meat (pounds)4221(a) How Trade Increases the Farmers Consumption0A33A*Farmers consumption without tradeFarmers consumption with tradeHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Trade Expands the Set of Consumption Possibi

46、litiesPotatoes (pounds)Meat (pounds)52.54020(b) How Trade Increases The Ranchers Consumption0B213B*Ranchers consumption without tradeRanchers consumption with tradeHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.The Gains from Trade: A SummaryThe GainsFrom Trade:The Increase i

47、n ConsumptionFarmer2 lbs meat (A*- A)1 lb potatoesRancher1 lb meat (B*- B)1/2 lb potatoesHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.The Principle of Comparative AdvantageuWho should produce what?uHow much should be traded for each product?Who can produce potatoes at a low

48、er cost-the farmer or the rancher?Differences in the costs of production determine the following:Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Differences in Costs of ProductionuThe number of hours required to produce a unit of output. (for example, one pound of potatoes)uTh

49、e opportunity cost of sacrificing one good for another.Two ways to measure differences in costs of production:Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Absolute AdvantageuDescribes the productivity of one person, firm, or nation compared to that of another.uThe producer

50、that requires a smaller quantity of inputs to produce a good is said to have an absolute advantage in producing that good.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Comparative AdvantageuCompares producers of a good according to their opportunity cost.uThe producer who ha

51、s the smaller opportunity cost of producing a good is said to have a comparative advantage in producing that good.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Specialization and TradeuWho has the absolute advantage?The farmer or the rancher?uWho has the comparative advantag

52、e?The farmer or the rancher?Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Absolute AdvantageuThe Rancher needs only 8 hours to produce a pound of potatoes, whereas the Farmer needs 10 hours.uThe Rancher needs only 1 hour to produce a pound of meat, whereas the Farmer needs 2

53、0 hours.The Rancher has an absolute advantage in the production of both meat and potatoes.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.The Opportunity Cost of Meat and PotatoesOpportunity Cost of:1 lb of Meat1 lb of PotatoesFarmer2 lb potatoes lb meatRancher1/8 lb potatoes8

54、 lb meatHarcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Comparative AdvantageuThe Ranchers opportunity cost of a pound of potatoes is 8 pounds of meat, whereas the Farmers opportunity cost of a pound of potatoes is 1/2 pound of meat.uThe Ranchers opportunity cost of a pound of

55、 meat is only 1/8 pound of potatoes, while the Farmers opportunity cost of a pound of meat is 2 pounds of potatoes.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Comparative Advantageso, the Rancher has a comparative advantage in the production of meat but the Farmer has a co

56、mparative advantage in the production of potatoes.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.The Principle of Comparative AdvantageuComparative advantage and differences in opportunity costs are the basis for specialized production and trade.uWhenever potential trading pa

57、rties have differences in opportunity costs, they can each benefit from trade.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Benefits of TradeTrade can benefit everyone in a society because it allows people to specialize in activities in which they have a comparative advantag

58、e.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.Adam Smith and TradeIn his 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith performed a detailed analysis of trade and economic interdependence, which economists still adhere to today.Harcourt, Inc. items and derived items copyright 2001 by Harcourt, Inc.David Ric