Intro. to Econ.
- 2. _____________________________ IB Economics : Aims P rovide students with a core knowledge of economics E ncourage students to think critically about economics P romote an awareness and understanding of internationalism in economics
- 3. _____________________________ IB Economics : Aims E ncourage students ’ development as independent learners E nable students to distinguish between positive and normative economics and enable them to recognize their own tendencies for bias
- 4. Positive vs. Normative Economics A positive statement is an assertion of fact A normative statement is when we make a value-judgment 08/13/09 Antu Panini Murshid--Principles of Macroeconomics
- 5. Positive or Normative Statements “ The unemployment rate is currently 5.8%” 08/13/09 Antu Panini Murshid--Principles of Macroeconomics ? ? POSITIVE
- 6. Positive or Normative Statements “ At 5.8% the unemployment rate is still too high” 08/13/09 Antu Panini Murshid--Principles of Macroeconomics ? ? NORMATIVE
- 7. Positive or Normative Statements “ An increase in the minimum wage will cause a decrease in employment among the least-skilled” 08/13/09 Antu Panini Murshid--Principles of Macroeconomics ? ? ? POSITIVE
- 8. Positive or Normative Statements “ The income gains from a higher minimum wage are worth more than any slight reductions in employment” 08/13/09 Antu Panini Murshid--Principles of Macroeconomics ? ? ? NORMATIVE
- 9. The Economic Problem Unlimited Wants Scarce Resources – Land, Labour, Capital Resource Use Choices A wind farm. Copyright: iStock.com
- 10. Scarcity Limited Desirable A wind farm. Copyright: iStock.com
- 11. The Economic Problem What goods and services should an economy produce? – should the emphasis be on agriculture, manufacturing or services, should it be on sport and leisure or housing? How should goods and services be produced? – labour intensive, land intensive, capital intensive? Efficiency? Who should get the goods and services produced? – even distribution? more for the rich? for those who work hard?
- 12. What do we produce? How do we produce it? For whom do we produce? Scarcity & Choice
- 13. Opportunity Cost Definition – the cost expressed in terms of the next best alternative sacrificed Helps us view the true cost of decision making Implies valuing different choices
- 14. Production Possibility Frontiers Show the different combinations of goods and services that can be produced with a given amount of resources No ‘ideal’ point on the curve Any point inside the curve – suggests resources are not being utilised efficiently Any point outside the curve – not attainable with the current level of resources Useful to demonstrate economic growth and opportunity cost
- 15. Production Possibility Frontiers Capital Goods Consumer Goods Yo Xo A B Y1 X1 Assume a country can produce two types of goods with its resources – capital goods and consumer goods If it devotes all resources to capital goods it could produce a maximum of Ym. If it devotes all its resources to consumer goods it could produce a maximum of Xm Ym Xm If the country is at point A on the PPF It can produce the combination of Yo capital goods and Xo consumer goods If it reallocates its resources (moving round the PPF from A to B) it can produce more consumer goods but only at the expense of fewer capital goods. The opportunity cost of producing an extra Xo – X1 consumer goods is Yo – Y1 capital goods.
- 16. Production Possibility Frontiers Capital Goods Consumer Goods Yo Xo A . B C Y1 X1 Production inside the PPF – e.g. point B means the country is not using all its resources It can only produce at points outside the PPF if it finds a way of expanding its resources or improves the productivity of those resources it already has. This will push the PPF further outwards.
- 17. If you were given $10,000 what would you buy with it? Why? You have to buy more than one thing. August 11 th , 2009
- 18. Take out the article you were supposed to print out for today. Read through it, and highlight any important economic terms. August 13 th , 2009
- 19. After watching the video, “Story of Stuff,” was there anything that opened your eyes? Was there anything she said that you disagreed with? August 13 th , 2009
- 20. $15.00 $8.00 $5.00 $3.00 $5.00 $5.00 $2.00 $4.00
- 21. $4.00 $5.00
Editor's Notes
- #2: This series of slides will introduce some key concepts to students – the economic problem, opportunity cost and production possibility frontiers.
- #10: Discussion can take place here about the key elements of the economic problem – the unlimited wants of humans against the scarce resources that exist to meet those wants. The notion of supply and demand can be introduced here and students can be involved by making a list of all the things they would like to buy if they had unlimited amounts of money! If then asked to trim that list down to meet a budget the more outrageous items disappear. This then introduces the notion of having to make choices – this issue can be discussed further using examples drawn from students own experiences about the choices they have had to make – possibly involving the choice of subjects they have had to make at college or school in relation to the time available, etc! How we use our scarce resources can also be linked into this discussion. The wind turbines highlight an issue raised in the In the News section (http://www.bized.ac.uk/cgi-bin/chron/chron.pl?id=1928) about the intention to build wind farms in areas of the UK and the controversies that it creates – useful to link theory and practice at an early stage.
- #12: This is the traditional three key questions any economic system has to answer. Many students would have difficulty defining what an ‘economy’ actually is! It is useful at this stage to clear this up – a system for the production and exchange of goods and services to satisfy the wants and needs of the population. This is open ended enough to be able to incorporate all manner of economic systems from a barter system that still exists in remote parts of the world to sophisticated economic systems such as the UK and US! The questions and the examples raised can be used for discussion – get the students to express their views at this stage and be as controversial as possible to stimulate discussion and involvement!
- #14: This is a key concept and one that often causes problems and misunderstanding but is central to students thinking like an economist. The crucial thing to knock out of students is their thinking that everything costs ‘money’. Because we have to make choices there are issues surrounding value judgements about what is important and what is not – it should not be difficult to stimulate discussion about what issues of government spending are important and what are not!
- #15: This slide introduces the key features about PPFs. The activity that accompanies this presentation seeks to apply PPFs in a slightly different way – focussing on using health resources. Going through the theory at this stage and then following it up with the activity will be useful in developing early understanding of the issues.
- #16: These slides introduce the diagrams and then have animation to show how points on the PPF relate to different resource use and allocation. Moving from point A to point B involves sacrificing some capital goods to gain more consumer goods and thus demonstrates the opportunity cost involved. Students doing history can be reminded about the resource allocation decisions taken by Stalin during the 1930s and the subsequent decisions by successive Soviet premiers since the war about what resources are important for a nation like the USSR! (you might of course have to explain a little bit about what the USSR was!)
- #17: The next slide allows the lecturer to demonstrate what happens when resources are not used efficiently and production takes place within the PPF. It then allows the expansion of the PPF and can be used to illustrate the issue of economic growth and where opportunity cost does not exist if the economy moves from point A to point C (in a simple context of course – there is always some form of sacrifice of using resources!).
- #18: This series of slides will introduce some key concepts to students – the economic problem, opportunity cost and production possibility frontiers.
- #19: This series of slides will introduce some key concepts to students – the economic problem, opportunity cost and production possibility frontiers.
- #20: This series of slides will introduce some key concepts to students – the economic problem, opportunity cost and production possibility frontiers.