Transcript Basic Economic Relations

Basic Economic Concepts
• Ways to organize an economic system
– Free markets
– Government-run
• Nature of decision making
– Objectives
– Constraints
Tools of Economic Analysis
• Economic rhetoric
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Words
Graphs
Tables/Spreadsheets
Mathematical equations
• Statistics and econometrics
Concepts Used in the Periodicals
We Read
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Causality
Ratios, decimals, percentages
Averages and expected values
Risk and uncertainty
Absolute and relative magnitudes
Reading and translating tables and charts
Differential calculus to solve optimization
problems
Expressing Functional
Relationships
• Tables/Spreadsheets
• Graphs
• Equations
– Linear, quadratic, multiplicative, exponential,
logarithmic
Graphing Data
• Basics of graphing
– Scatter diagrams, slope, intercept
• Functional relationships
– Dependent and independent variables
• Time series relationships
• Cross section relationships
Marginal Analysis
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Profit maximization
Total revenue maximization
Cost minimization
Break-even point
Net Present Value
• Discount rates
• Probability and risk
• Expected values