Bài giảng MicroEconomics - Chapter 01 Limits, Alternatives, and Choices

Limits, Alternatives, and ChoicesChapter 1McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.Chapter ObjectivesEconomics definedRole of economic theoryMicroeconomics vs. macroeconomicsResource scarcity and the economizing problemProduction possibilities model1-2Economics DefinedEconomic wants exceed productive capacitySocial science concerned with making optimal choices under conditions of scarcity1-3The Economic PerspectiveThinking like an economistKey features:Scarcity and choicePurposeful behaviorMarginal analysis1-4Scarcity and ChoiceResources are scarceChoices must be madeThere is no free lunchOpportunity cost 1-5Purposeful BehaviorRational self-interestIndividuals and utilityFirms and profitDesired outcomes1-6Marginal AnalysisMarginal benefitMarginal costMarginal means extraComparison of marginal benefit and marginal cost1-7Economic ModelsThe scientific methodCause and effectEconomic principlesSimplification of realityOther-things-equal assumptionGraphical expression1-8Macro vs. MicroMacroeconomicsAggregateMicroeconomicsIndividual UnitsPositive EconomicsNormative Economics1-9Individual’s Economizing ProblemLimited incomeUnlimited wantsA budget lineTradeoffs & opportunity costsMake best choice possibleChange in income1-10A Budget Line6543210024681012DVDs$20Books$101210 8 6 4 2 02 4 6 8 10 12 14$120 BudgetIncome = $120Pdvd = $20= 6Income = $120Pb = $10= 12AttainableUnattainableQuantity of Paperback BooksQuantity of DVDs1-11Society’s Economizing ProblemScarce resourcesLandLaborCapitalEntrepreneurial AbilityFactors of production1-12Production Possibilities ModelIllustrate production choicesAssumptions:Full employmentFixed resourcesFixed technologyTwo goods1-13Type of ProductPizzas (in hundred thousands)Industrial Robots (in thousands)Production AlternativesABCDE10974001234Plot Points to Create GraphProduction Possibilities Table1-14Production Possibilities CurvePizzasIndustrial RobotsAttainable0 1 2 3 4 5 6 7 8 9 1413121110 9 8 7 6 5 4 3 2 1UnattainableABCDEEconomicGrowthNow AttainableA’B’C’D’E’1-15Production Possibilities CurvePizzasIndustrial RobotsAttainable0 1 2 3 4 5 6 7 8 9 1413121110 9 8 7 6 5 4 3 2 1UnattainableABCDELaw of IncreasingOpportunity CostA’B’C’D’E’Shape of the Curve1-16Production Possibilities CurvePizzasIndustrial RobotsUnder or Unemployment0 1 2 3 4 5 6 7 8 9 1413121110 9 8 7 6 5 4 3 2 1UnattainableA’B’C’D’E’U1-17The Future EconomyConsequences of unemploymentEconomic growthMore resources Better quality resourcesTechnological advances1-18Future PossibilitiesGoods for the PresentGoods for the FutureGoods for the FutureGoods for the PresentPFCurrentCurveCurrentCurveFutureCurveFutureCurveCompare Two Hypothetical EconomiesPresentvilleFutureville1-19International TradeProduction pointConsumption pointSpecialization Preview1-20Optimal Allocation of Resources1510 5 01 2 3abcdeMB = MCMCMBQuantity of PizzaMarginal Benefit & Marginal Cost1-21LAST Word: Pitfalls to Sound Economic ReasoningBiasesLoaded terminologyFallacy of compositionPost hoc fallacyCorrelation but not causation 1-22Key Termseconomicseconomic perspectiveopportunity costutilitymarginal analysisscientific methodeconomic principleother-things-equal assumptionmacroeconomicsaggregatemicroeconomicspositive economicsnormative economicseconomizing problembudget lineeconomic resourceslandlaborcapitalinvestmententrepreneurial abilityfactors of productionconsumer goodscapital goodsproduction possibilities curvelaw of increasing opportunity costseconomic growth1-23Next Chapter PreviewThe Market System and the Circular Flow1-24