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WHAT IS ECONOMICS? WHAT IS ECONOMICS?

WHAT IS ECONOMICS? - PowerPoint Presentation

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Uploaded On 2016-06-10

WHAT IS ECONOMICS? - PPT Presentation

Economic Reality The Economic Myth Economic choices involve only money Economic Reality Economics focuses on choices the choices that we make every day Both as individuals and as a society Economics ID: 356982

benefit economic economics economy economic benefit economy economics study trade voluntary resources cost behavior utility exchange marginal choices time

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Presentation Transcript

Slide1

WHAT IS ECONOMICS?Slide2

Economic Reality

The Economic Myth

Economic choices involve only money.

Economic Reality

Economics focuses on choices, the choices that we make every day. Both as individuals and as a society.Slide3

Economics

The study of how people choose to use scarce resources to satisfy their wants (and needs).

Scarcity

The Lack of enough resources to satisfy our wants

Human wants always outstrip the limited resources available to satisfy them.

These resources also have alternative uses

This is also referred to as the economic problemSlide4

Opportunity Cost

Every time we make a decision there is a next best alternative not chosen, this is termed the opportunity cost.

When we choose we refuse, usually the things we choose from are positive.

Trade-offs

All choices that we have a cost versus benefit relationship.

Cost vs. benefit can change over time.Slide5

Production Possibilities Curve

A model used by economists to illustrate the impact of scarcity on the economy.Slide6

Macroeconomics

The study of the behavior of the economy as a whole and how major economic sectors – such as industry and the government – interact.

Microeconomics

The study of specific factors in the economy, for example, price, costs, profit, competition and human behavior.

Microeconomics focuses on the behavior of individual players in an economy, especially what goes on in the market place.Slide7

Normative Economics

The study of the way things ought to be in the economic world.

Should taxes be raised to pay for universal health care?

Will a tax cut for the rich stimulate a sluggish economy?

Will increased standards in education provide a better workforce?Slide8

Positive Economics

The study of the way things are in the economic world.

The goal of positive economics is to increase knowledge of how the economy works by describing and explaining how economic behavior is, not how it should be.Slide9

Utility

The benefit or satisfaction you derive from the use (choice) of a good or a service.

Total Utility

The maximum satisfaction or maximum benefit you can get from a choice that you make.

Slide10

Marginal Utility

The additional, or marginal, benefit derived from consuming a successive amount of something.

Law of Diminishing Marginal Utility

The marginal benefit from using each additional unit of something during a given time period will tend to decline as each is used.Slide11

Value

A measure of worth, what people are willing to give up for something.

Voluntary Exchange

If trade is not voluntary it is not trade!Slide12

Fair Trade

Any voluntary exchange from which both traders anticipate gain.

Involuntary Exchange

When force or coercion is used by one side in a trade, one side gains at the expense of the other.

Slavery, conscription etc.

**Value is created only through voluntary exchange**