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Day2

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  • 1. The Theory of Economics does not furnish a body of settled conclusions immediately applicable to policy. It is a method rather than a doctrine, an apparatus of the mind, a technique of thinking which helps its possessor to draw correct conclusions. 经济学的理论并不包括一组已经被认证的结论 可以即刻用于解释政府的决策。 它是一个方法而不是一个教条。它是人思想发 出的工具,是一种思考的技术, 让拥有人能够用它后达到正确的结论。 (From: The General Theory of Employment, Interest, and Money)
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  • 3. Is there ever a time when all your desires are met?
  • 4. What Economics is Economics is a social science, attempting to study people, their behavior, and the choices that they make. Textbook Definition: Economics is the study of how human beings coordinate their wants and desires, given the decision- making mechanism, social customs, and political realities of the society. Mr. H’s Definition: 1.) What to produce. 2.) How much to produce. 3.) How to produce it. 4.) Who to produce it for. social science
  • 5. Basic ideas of Economics
  • 6. 1.) Resources are Scarce. Basic ideas of Economics Land Labor Capital entrepreneurship - the quantity available is not large enough to satisfy all productive uses and all of people’s desires.
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  • 14. Scarcity – An example A society that has 500 children is threatened by a disease that strikes only children. A medical company has made a pill that reduces the chances of getting the disease from 90% to only 10%. The company is only able to produce 300 pills right now. If parents can get more than one pill it reduces the chance of their child dying by even more. How do you allocate分配 the pills? How do you decide who gets pills?
  • 15. 2.) Trade - Offs The big trade off in society is between efficiency and equality. - Making decisions requires trading one thing for another 效率 平等 1.) Resources are Scarce. Basic ideas of Economics - the quantity available is not large enough to satisfy all productive uses and all of people’s desires.
  • 16. Trade - Offs “There is no such thing as a free lunch” you don't get something for nothing 鱼与熊掌不可兼得
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  • 25. 1.) Resources are Scarce. Basic ideas of Economics 2.) Trade - Offs - Making decisions requires trading one goal for another. 3.) Opportunity Costs - The real cost of something is what you must give up to get it.The next one – not all of them
  • 26. Everything Has a Value To an economist, everything has a value (you can put a value on anything) How much are the following worth to you? --- A pen. --- A coffee cup --- Your pet --- Your time --- Your finger --- A human life
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  • 31. Opportunity Costs Making decisions requires individuals to consider the benefits and costs of some action. 每一项决策是有成本的 What you must give up when you make a decision Ex: --- I decide to come here today. --- I decide to work on my lesson plans last night. --- I decide to spend time with my daughter. --- I decided to move to China.
  • 32. 1.) Resources are Scarce. Basic ideas of Economics 2.) Trade - Offs 3.) Opportunity Costs - The real cost of something is what you must give up to get it. 4.) Marginal Thinking. - Means an additional one, the measurement from one unit to the next. 最后的东西之一 ‚How much?‛ is a decision at the margin. (the very last unit, not of everything)
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  • 49. Ex: Marginal Analysis Cans of soda Total Utility (U) Marginal Utility (MU) Total Cost (TC) Marginal Cost (MC) 0 0 0 1 5 1 2 8 2 3 10 3 4 11 4 5 11 5 6 4 6 The word ‚Utility‛ = Happiness
  • 50. Cans of Soda Total Utility (U) Marginal Utility (MU) Total Cost (TC) Marginal Cost (MC) 0 0 -- 0 -- 1 5 5 1 1 2 8 3 2 1 3 10 2 3 1 4 11 1 4 1 5 11 0 5 1 6 4 -7 6 1 Ex: Marginal Analysis The word ‚Utility‛ = Happiness
  • 51. What does Rational mean? 合理的 What does mean to be Rational?
  • 52. { ‚It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest‛ “这不是从仁的屠夫,酿酒商,或面包 师,我们可以期望我们的晚餐,但他们 关于自己的兴趣” To be rational is also to be selfish and this is good for society.
  • 53. 1.) Resources are Scarce. Basic ideas of Economics 2.) Trade - Offs 3.) Opportunity Costs 4.) Marginal Thinking. - Means an additional one, the measurement from one unit to the next. 最后的东西之一 5.) Rational Thinking People usually exploit opportunities to make themselves better off. 合理的 人们通常利用机会 来改善自己的境况。
  • 54. Mary is a lawyer, who charges 800RMB/hour for her time. John is a typist, who charges 100RMB/hour for his time. Mary types 100 w.p.m. John types 50 w.p.m. Mary has something that is going to take her 2 hours to type, and she’s the faster typist. Should she hire John to type it, or should she do it herself (assume she doesn‘t get paid for time spent typing). Ex: Rational Behavior and Self-Interest
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  • 59. You are at a store about to buy a fancy new notebook. It costs 100RMB. Before you buy it, your friend calls from a store 30 minutes away, that is selling the same notebook for 50MB. Would you drive to the other store to get the cheaper price? Ex: Rational Behavior and Self-Interest
  • 60. You are at a car dealership about to buy a new car. It costs 380,000RMB. Before you buy it, your friend calls from a car dealership 30 minutes away, that is selling the same car for 379,950RMB. Would you drive to the other store to get the cheaper price? Ex: Rational Behavior and Self-Interest
  • 61. 1.) Resources are Scarce. Basic ideas of Economics 2.) Trade - Offs 3.) Opportunity Costs 4.) Marginal Thinking. 5.) Rational Thinking -People usually exploit opportunities to make themselves better off. 6.) Specialization Also related to Productivity - You do what you do best, others do what they do best, and everyone has more. 专业化 生产率
  • 62. Adam Smith as a moral philosopher, was: ‘to do nothing but observe everything’ In observing a pin factory he saw a key the wealth was the division of labor
  • 63. Ways to interpret Economic theory Positive economics is the study of what is 结果是基于数据 Normative economics is the study of what should be 是基于你的愿望是什么结果
  • 64. Ways to interpret Economic theory Positive economics is the study of what is 结果是基于数据 Normative economics is the study of what should be 是基于你的愿望是什么结果
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  • 66. What Economics is Economics is a social science, attempting to study people, their behavior, and the choices that they make. Textbook Definition: Economics is the study of how human beings coordinate their wants and desires, given the decision- making mechanism, social customs, and political realities of the society. Mr. H’s Definition: 1.) What to produce. 2.) How much to produce. 3.) How to produce it. 4.) Who to produce it for.
  • 67. So what do we produce?
  • 68. Everything
  • 69. What do we produce? China’s imports a lot of mineral fuel (oil), organic chemicals, iron and steel, ores, copper, cotton, and wood, cars, paper, medical instruments, plastics, machinery, electrical machinery, aircraft, cotton, food stuffs. USA imports a lot of office equipment, telecommunication equipment, clothes, furniture, shoes, cars, purses, iron, steel, paper products, toys, building supplies, clocks, watches, chemicals, and a bunch of random crap that breaks really easy.
  • 70. We classify (分类) what we make into different categories (类别) (4 main categories)
  • 71. 1.) Consumption goods and services Things We Produce: – stuff bought by individuals and used to provide personal enjoyment and help make your life better.
  • 72. 1.) Consumption goods and services Things We Produce: – stuff bought by individuals and used to provide personal enjoyment and help make your life better. 2.) Capital goods – goods bought by business to increase their productive resources
  • 73. 1.) Consumption goods and services Things We Produce: 2.) Capital goods – goods bought by business to increase their productive resources 3.) Government goods and services – stuff bought by governments
  • 74. 1.) Consumption goods and services Things We Produce: 2.) Capital goods 3.) Government goods and services – stuff bought by governments 4.) Export goods and services – stuff produced in one country and sold in other countries.
  • 75. What Economics is Economics is a social science, attempting to study people, their behavior, and the choices that they make. Textbook Definition: Economics is the study of how human beings coordinate their wants and desires, given the decision- making mechanism, social customs, and political realities of the society. Mr. H’s Definition: 1.) What to produce. 2.) How much to produce. 3.) How to produce it. 4.) Who to produce it for.
  • 76. So how do we produce?
  • 77. We use Factors of Production to make things The things that we use to make other things are broken into 4 main categories too
  • 78. Factors of Production How We Produce: 1.) Land – natural resources from the earth
  • 79. Factors of Production How We Produce: 1.) Land – natural resources from the earth 2.) Labor – Work time and effort used to produce stuff
  • 80. Factors of Production How We Produce: 1.) Land 2.) Labor – Work time and effort used to produce stuff 3.) Capital – tools, instruments, machines, buildings, anything that is now used to produce goods and services
  • 81. Factors of Production How We Produce: 1.) Land 2.) Labor – Work time and effort used to produce stuff 3.) Capital – tools, instruments, machines, buildings, anything that is now used to produce goods and services Human Capital – knowledge and skills of people have and gain in making stuff
  • 82. Factors of Production How We Produce: 1.) Land 2.) Labor 3.) Capital – tools, instruments, machines, buildings, anything that is now used to produce goods and services 4.) Entrepreneurship – the risk takers, business owners and people that take land, labor, and capital to produce things
  • 83. What Economics is Economics is a social science, attempting to study people, their behavior, and the choices that they make. Textbook Definition: Economics is the study of how human beings coordinate their wants and desires, given the decision- making mechanism, social customs, and political realities of the society. Mr. H’s Definition: 1.) What to produce. 2.) How much to produce. 3.) How to produce it. 4.) Who to produce it for.
  • 84. So for whom do we produce?
  • 85. We make things for those that can buy things: That means people have to get money somehow and there are different ways to do this We break this up into 4 different categories as well so we can use them in equations later too
  • 86. For Whom do we Produce: 1.) Rent – income paid for the use of land We make things for those that can buy things:
  • 87. For Whom do we Produce: 1.) Rent – income paid for the use of land We make things for those that can buy things: 2.) Wages – income paid for the services of labor
  • 88. For Whom do we Produce: 1.) Rent We make things for those that can buy things: 2.) Wages – income paid for the services of labor 3.) Interest 利息 – income paid for the use of capital
  • 89. For Whom do we Produce: 1.) Rent We make things for those that can buy things: 2.) Wages 3.) Interest 利息 – income paid for the use of capital 4.) Profit (or loss) – income earned by an entrepreneur for running a business
  • 90. For Whom do we Produce: 1.) Rent We make things for those that can buy things: 2.) Wages 3.) Interest 利息 4.) Profit (or loss) – income earned by an entrepreneur for running a business *** 5.) Government – add only because they demand different types of things that are produced.
  • 91. What Economics is Economics is a social science, attempting to study people, their behavior, and the choices that they make. Textbook Definition: Economics is the study of how human beings coordinate their wants and desires, given the decision- making mechanism, social customs, and political realities of the society. Mr. H’s Definition: 1.) What to produce. 2.) How much to produce. 3.) How to produce it. 4.) Who to produce it for.

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