Transcript Principles of Economics, Case and Fair,9e

Why Study Economics?
To Learn a Way of Thinking
To Understand Society
To Understand Global Affairs
To Be an Informed Citizen
The Scope of Economics
Microeconomics and
Macroeconomics
The Diverse Fields of Economics
The Method of Economics
Theories and Models
Economic Policy
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster
economics
The study of how individuals and societies
choose to use the scarce resources that nature
and previous generations have provided.
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster
There are four main reasons to study economics:
 to learn a way of thinking,
 to understand society,
 to understand global affairs, and
 to be an informed citizen.
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster
Probably the most important reason for studying
economics is to learn a way of thinking.
Three fundamental concepts:
 Opportunity cost
 Marginalism, and
 Efficient markets
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster
Opportunity cost
is the best alternative that we forgo, or give up, when we make
a choice or a decision.
Opportunity costs arise because time and resources are scarce.
Nearly all decisions involve trade-offs.
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster
Marginalism
The process of analyzing the additional or incremental costs
or benefits arising from a choice or decision.
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster
Sunk Costs
Batık maliyet
Costs that cannot be avoided, regardless of what is done in
the future, because they have already been incurred.
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster
Efficient Market
(etkin piyasa)
A market in which profit opportunities
are eliminated almost instantaneously.
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster
The study of economics teaches us a way of thinking
and helps us make decisions.
The study of economics is an essential part of
the study of society.
An understanding of economics is essential to an
understanding of global affairs.
To be an informed citizen requires a basic
understanding of economics.
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster
microeconomics
The branch of economics that examines the functioning of
individual industries and the behavior of individual decisionmaking units—that is, business firms and households.
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster
macroeconomics
The branch of economics that examines the economic
behavior of aggregates—income, employment,
output, and so on—on a national scale.
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster
Microeconomics
•Microeconomics looks at the
individual unit—the household,
the firm, the industry.
•It sees and examines the “trees”.
Macroeconomics
•Macroeconomics looks at the
whole, the aggregate.
•It sees and analyzes the “forest.”
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster
TABLE: Examples of Microeconomic and Macroeconomic Concerns
DIVISION OF
PRODUCTION
ECONOMICS
Micro
Production/Output
economics
in Individual
Industries and
Businesses
Macro
economics
PRICES
INCOME
EMPLOYMENT
Price of
Individual
Goods and
Services
Distribution of
Income and
Wealth
Employment by
Individual Businesses
& Industries
Wages in the
auto
industry
Minimum
wages
Executive
salaries
Poverty
Jobs in the steel
industry
Number of employees
in a firm
National
Income
Total wages
and salaries
Employment and
Unemployment in
the Economy
How much steel
How many offices
How many cars
Price of medical
care
Price of gasoline
Food prices
Apartment rents
National
Production/Output
Aggregate Price
Level
Total Industrial
Output
Gross Domestic
Product
Growth of Output
Consumer prices
Producer Prices
Rate of Inflation
Total corporate
profits
Total number of jobs
Unemployment rate
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster
The questions economics asks and attempts to answer fall into two
categories:
is an assertion about economic reality that can be supported or rejected by
reference to the facts. It is used to understand the behavior and operation
of economic systems, rather than passing judgments on them. It describes
what exists and how it works.
an approach to economics that analyzes outcomes of economic behavior,
evaluates them as good or bad, and may prescribe courses of action. Also
called policy economics.
Simply speaking, positive economics deal with what is while
normative economics is concerned with what should be.
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster
İktisat bilimi iki ana dala ayrılır:
Ekonomik olaylar gözlemlenerek, olaylar arasındaki sebep-sonuç ilişkileri
ortaya konulur. Bu sebep-sonuç ilişkilerine dayalı olarak hipotezler
geliştirilir.
Pozitif iktisat, hangi malların ne miktarda üretilmesi lazım geldiğini,
toplum tercihlerini göz önüne alarak araştırır.
Değer yargılarına yer verir. Pozitif iktisatta olduğu gibi, sebep-sonuç
ilişkilerini gözetleyerek, «neden» ve «niçin» sorularının cevabını aramaz.
Normatif iktisat, toplum için hangi malların ne miktarda üretilmesinin
daha iyi olacağını araştırır.
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster
Positive economics includes:
which involves the compilation of data that describe
phenomena and facts.
that involves building models of behavior. A theory
is a statement or set of related statements about
cause and effect, action and reaction.
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster
A formal statement of a theory, usually a
mathematical statement of a presumed relationship
between two or more variables.
A measure that can change from time to time or
from observation to observation.
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster
is the principle that irrelevant detail should be cut away.
Models are simplifications, not complications, of
reality.
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster
A device used to analyze the relationship between two
variables while the values of other variables are held
unchanged.
Ceteris paribus, Latince "Diğer tüm durumlar sabitken"
anlamına gelen bir kalıp ve analiz yöntemidir.
The ceteris paribus device is part of the process of
abstraction used to focus only on key relationships.
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster
Models and theories can be expressed in many ways. The most
common ways are in words, in graphs, and in equations.
The most common method of expressing the quantitative
relationship between two variables is graphing that
relationship on a two-dimensional plane.
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster
In formulating theories and models we must avoid two
pitfalls :
 post hoc, ergo propter hoc
Literally, “after this (in time), therefore because of this.” A common
error made in thinking about causation: If Event A happens before
Event B, it is not necessarily true that A caused B.
 fallacy of composition
The erroneous belief that what is true for a part is necessarily true
for the whole. Theories that seem to work well when applied to
individuals often break down when they are applied to the whole.
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster
refers to the collection and use of data to test economic
theories. In principle, the best model is the one that
yields the most accurate predictions.
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster
To make policy, one must be careful to specify
criteria for making judgments.
Four specific criteria are used most often in
economics:
 Efficiency, or allocative efficiency. An efficient
economy is one that produces what people want
at the least possible cost.
 Equity, or fairness of economic outcomes.
 Growth, or an increase in the total output of an
economy.
 Stability, or the condition in which output is
steady or growing, with low inflation and full
employment of resources.
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Economics 9e by Case, Fair and Oster