1、R. GLENNHUBBARDANTHONY PATRICKOBRIENFIFTH EDITION 2015 Pearson Education, Inc.2 2015 Pearson Education, Inc.Chapter Outline andLearning Objectives1.1 Three Key Economic Ideas1.2 The Economic Problem That Every Society Must Solve1.3 Economic Models1.4 Microeconomics and Macroeconomics1.5 A Preview of
2、 Important Economic TermsAPPENDIX: Using Graphs and FormulasCHAPTER1 Economics:Foundations and Models3 2015 Pearson Education, Inc.What Is This Class About?People make choices as they try to attain their goals. Choices are necessary because we live in a world of scarcity.Scarcity: A situation in whi
3、ch unlimited wants exceed the limited resources available to fulfill those wantsEconomics is the study of these choices.Economists study these choices using economic models, simplified versions of reality used to analyze real-world economic situations.4 2015 Pearson Education, Inc.Typical “Economics
4、” QuestionsWe will learn how to answer questions like these: How are the prices of goods and services determined? How does pollution affect the economy, and how should government policy deal with these effects? Why do firms engage in international trade, and how do government policies affect interna
5、tional trade? Why does government control the prices of some goods and services, and what are the effects of those controls?LEARNING OBJECTIVE5 2015 Pearson Education, Inc.Three Key Economic Ideas1.1Explain these three key economic ideas:People are rational;People respond to economic incentives; and
6、Optimal decisions are made at the margin.6 2015 Pearson Education, Inc.1. People Are RationalEconomists generally assume that people are rational.Rational: Using all available information to achieve your goals.Rational consumers and firms weigh the benefits and costs of each action and try to make t
7、he best decision possible.Example: Microsoft doesnt randomly choose the price of its Windows software; it chooses the price(s) that it thinks will be most profitable.7 2015 Pearson Education, Inc.2. People Respond to Economic IncentivesAs incentives change, so do the actions that people will take.Ex
8、ample: Changes in several factors have resulted in increased obesity in Americans over the last couple of decades, including: Decreases in the price of fast food relative to healthful food Improved non-active entertainment options Increased availability of health care and insurance, protecting peopl
9、e against the consequences of their actions8 2015 Pearson Education, Inc.3. Optimal Decisions Are Made at the MarginWhile some decisions are all-or-nothing, most decisions involve doing a little more or a little less of something.Example: Should you watch an extra hour of TV, or study instead?Econom
10、ists think about decisions like this in terms of the marginal cost and benefit (MC and MB): the additional cost or benefit associated with a small amount extra of some action.Comparing MC and MB is known as marginal analysis.9 2015 Pearson Education, Inc.MakingtheConnection Health Insurance and Obes
11、ityObesity is rising in America, for various reasons.Is one of those reasons health insurance?People with health insurance have less incentive to stay healthy than people without health insurance.Holding constant other factors like age, gender, and income, research shows people with health insurance
12、 are more likely to be obese.They are responding to economic incentives.LEARNING OBJECTIVE10 2015 Pearson Education, Inc.The Economic Problem That Every Society Must Solve1.2Discuss how an economy answers these questions:What goods and services will be produced?How will the goods and services be produced?Who will receive the goods and services produced?
