Transcript Economics - Coach Gilmore

Economics
Unit One
Chapter One: Part Two
Graphs and What They Tell Us
• Charts and tables show data in rows and
columns
– They can reveal patterns by showing numbers in
relation to other numbers
• Graphs use two set of variables
– One along the horizontal axis
– One along the vertical axis
Graphs and What They Tell Us
• Line Graphs:
– Plot at least two sets of data
• One on the horizontal axis (x-axis)
• One on the vertical axis (y-axis)
– The actual line on the graph is called the curve
Line Graph
Graphs and What They Tell Us
• Bar graphs compare relative values of things
– The varying heights of each bar show the
proportionate quantity or value of a given
product/ item compared to other similar
products/ items
Bar Graph/Chart
Graphs and What They Tell Us
• Pie Charts show how parts make the whole
– This is a good way to compare percentages
Pie Graph/Chart
Graphs and Economic Models
• Economic models are basically graphs which
are simplified representations of economic
forces.
– Expressed in : words; graphs; or equations
• A production possibilities curve is one type of
economic model, and one of the most useful
and most common.
PPC
• A PPC charts the maximum amount of goods
or services that can be produced from limited
resources
• PPC’s run between extremes of producing
only one item or the other
– The typical model distinguishes between “Guns
and Butter” – or military and consumer goods
• PPC’s show the trade-off between items
– More of one means less of another
PPC
• Concepts revealed by a PPC:
– Efficiency: producing the maximum amount of
goods and services
• These are points on the curve
– Underutilization: producing fewer goods and
services than possible
• These are points on inside the curve
– You cannot work above the curve, it is impossible.
• If you are working above the curve, then the curve has
moved due to an increase in the ability to produce
PPC Example
Micro v Macro
• Economics is the study of how individuals and
societies satisfy their unlimited wants with
limited resources
– However, there are two specific types of
economics, and it is important to understand the
distinctions between the two.
Micro v Macro
• Microeconomics
– studies the individual players (or aspects) in an
economy
• Includes players: individuals, families, businesses, etc
• Includes aspects: prices, costs, profits, competition, as
well as consumer and producer behavior
• Macroeconomics
– studies the behavior of the economy as a whole
• Looks at a combination of all individual units
• Includes: inflation, unemployment, aggregate demand,
aggregate supply
• Also includes: monetary system, business cycle, tax
policies, international trade, etc.
Positive v. Normative
• There are not only the previous was of
studying economics, but these as well
• Positive Economics: - it is what it is
– Describes and explains economics as it is
• Uses verifiable facts
• Does not make judgments
• Normative Economics: - this is what it could
be
– Studies what economic behavior should be
• Makes value judgments to recommend future actions