Frist· Identify the key concepts of Economics.· Discuss the ke

Frist
· Identify the key concepts of Economics.
· Discuss the key concepts of Economics
2.2 Action Required:
Kindly go through the video link
https://www.khanacademy.org/economics-finance-
domain/macroeconomics/gdp-topic/econ-intro-in-macro-
tutorial/v/introduction-to-economics
2.3 Test your Knowledge (Question):
Explain Key principles of economics
2.4 Instructions
Answer the given question in Discussion Board
Second
2.1 Learning Outcomes:
•&νβσπ;&νβσπ;&νβσπ;&νβσπ;&νβσπ;&νβσπ; Describe the
concept of operations functions, supply chain strategy, process
selection,
forecasting, capacity planning, production forecast methods and
schedule operations.
•&νβσπ;&νβσπ;&νβσπ;&νβσπ;&νβσπ;&νβσπ; Demonstrate
process-flow analysis, process design solutions, operations
strategies,
Inventory Control System and customer services in the business
operation.

·
Watch the short video in the following link
https://www.youtube.com/watch?v=jL5bIev5Qw4
Q. Explain the role of Supply chain Management in the modern
business.
2.4 Instructions
· Answer the question in test your knowledge section.
Third
3.1 Learning Outcomes:
·
Demonstrate process-flow analysis, process design
solutions, operations strategies,
Inventory Control System and customer services in the business
operation.
·
Watch the short video in the following link
https://www.youtube.com/watch?v=SUJ77HjrZtc
Q. Write note on: Project, Job shop, Flow shop and continuous
flow
3.4 Instructions
· Answer the question in test your knowledge section.

1
Ten Principles of
Economics Premium
PowerPoint
Slides by
Ron Cronovich
© 2012 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as
permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for
classroom use.
N. Gregory Mankiw
Macroeconomics
Principles of
Sixth Edition
use as

classroom use.
In this chapter,
look for the answers to these questions:
• What kinds of questions does economics
address?
• What are the principles of how people make
decisions?
• What are the principles of how people interact?
• What are the principles of how the economy as
a whole works?
use as
classroom use.
What Economics Is All About

▪ Scarcity: the limited nature of society’s resources
▪ ‫ةعيبطلا‬ ‫ةدودحملا‬ ‫دراومل‬ ‫عمتجملا‬: ‫ةردنلا‬
▪ Economics: the study of how society manages its scarce
resources, e.g.
▪ how people decide what to buy,
how much to work, save, and spend
▪ how firms decide how much to produce,
how many workers to hire
▪ how society decides how to divide its resources between
national
defense, consumer goods, protecting the environment, and other
needs
▪ ‫ةردانلا‬ ، ‫ىلع‬ ‫ليبس‬ ‫لاثملا‬ ،‫راوملل‬ ‫ع‬‫تم‬ ‫مج‬ ‫ال‬ ‫إدارة‬ ‫ية‬ ‫ف‬ ‫ي‬ ‫ك‬ ‫سة‬ ‫درا‬ ‫ده‬
: ‫داصتقلاا‬
▪ ‫راخدلااوقافنلإاو‬، ‫لمعلا‬ ، ‫مكو‬ ‫ةدم‬ ‫فيك‬ ‫ررقي‬ ‫سانلا‬ ‫ام‬ ‫هنورتشي‬ ،
▪ ‫لامعلافيظوتلل‬ ‫ةيمك‬ ‫جاتنلاا‬، ‫مكو‬ ‫ددع‬ ‫ررقت‬ ‫تاكرشلا‬ ‫فيك‬
▪ ‫فيك‬ ‫ررقي‬ ‫عمتجملا‬ ‫ةيفيك‬ ‫ميسقت‬ ‫هدراوم‬ ‫نيب‬ ‫عافدلا‬ ‫ينطولا‬
‫ي‬‫ب‬ ‫ال‬ ‫ة‬ ‫ماي‬‫وح‬ ‫ية‬ ‫ك‬ ‫تهال‬ ‫س‬ ‫اال‬ ‫ع‬‫ل‬ ‫س‬ ‫وال‬ ‫يرها‬ ‫وغ‬ ‫ة‬ ‫ئ‬
‫ياجات‬ ‫ت‬ ‫ح‬ ‫اال‬ ‫من‬
The principles of
HOW PEOPLE

MAKE DECISIONS
‫تخذ‬ ‫ي‬ ‫يف‬ ‫ك‬ ‫بادئ‬ ‫م‬
‫ت‬ ‫قرارا‬ ‫ال‬ ‫ناس‬ ‫ال‬
use as
classroom use.
PRINCIPLE #1:
People Face Tradeoffs ‫تلادابملا‬ ‫سانلاهيراجتلا‬ ‫هجاوي‬
All decisions involve tradeoffs. Examples:
▪ Going to a party the night before your midterm leaves less
time for studying.
▪ Having more money to buy stuff requires working longer
hours, which
leaves less time
for leisure.
▪ Protecting the environment requires resources

that could otherwise be used to produce
consumer goods.
▪ :‫ةلثمأ‬. ‫عيمج‬ ‫تارارقلا‬ ‫يوطنت‬ ‫ىلع‬ ‫تلادابملا‬
▪ .‫باهذلا‬ ‫ىلإ‬ ‫ةلفح‬ ‫يف‬ ‫ةليللا‬ ‫يتلا‬ ‫قبست‬ ‫ةرتف‬ ‫فصتنم‬ ‫ةدم‬
‫تك‬ ‫س‬ ‫درا‬
▪ . ‫يترك‬ ‫مما‬ ، ‫أطعل‬ ‫سامات‬ ‫المعاد‬ ‫للراا‬ ‫المال‬ ‫من‬ ‫الماي‬ ‫ملأ‬ ‫عل‬ ‫الح‬ ‫يترلي‬
‫الفراو‬ ‫ولق‬ ‫لقااا‬ ‫ألق‬ ‫ا‬‫ف‬‫ت‬‫ول‬
▪ .‫طتت‬ ‫ع‬‫ل‬ ‫س‬ ‫تاج‬ ‫ن‬ ‫إل‬ ‫امها‬ ‫تخ‬ ‫س‬ ‫ا‬ ‫كن‬ ‫م‬ ‫ي‬ ‫معارد‬ ‫ئة‬ ‫ي‬ ‫ب‬ ‫ال‬ ‫ة‬ ‫حماي‬ ‫ي‬ ‫ل‬
‫ية‬ ‫ك‬ ‫تهال‬ ‫س‬ ‫ا‬
use as
classroom use.
PRINCIPLE #1:
People Face Tradeoffs
▪ Society faces an important tradeoff:
▪ ‫هلدابم‬ ‫هيراجت‬ ‫عمتجملاةمهم‬ ‫هجاوي‬
efficiency vs. equality
▪ Efficiency: when society gets the most from its scarce
resources
▪ Equality: when prosperity is distributed uniformly among

society’s
members
▪ Tradeoff: To achieve greater equality,
could redistribute income from wealthy to poor.
But this reduces incentive to work and produce, shrinks the size
of the
economic “pie.”
▪ ‫امدنع‬ ‫ديفتسي‬ ‫عمتجملا‬ ‫رثكأ‬ ‫نم‬ ‫هدراوم‬ ‫ةحيحشلا‬: ‫ةاافكلا‬
▪ ‫امدنع‬ ‫متي‬ ‫عيزوت‬ ‫ااخرلا‬ ‫لكشب‬ ‫دحوم‬ ‫نيب‬ ‫ااضعأ‬ ‫عمتجملا‬:
‫ساواة‬ ‫م‬ ‫ال‬
▪ ‫نكل‬ ‫اذه‬ ‫للقي‬ ‫نم‬ ‫زفاحلا‬ . ‫قيقحتل‬ ‫ردق‬ ‫ربكأ‬ ‫نم‬ ‫ةاواسملا‬ ، ‫نكمي‬
‫ال‬ ‫ع‬ ‫عزي‬ ‫ت‬ ‫ادة‬‫اةإم‬ ‫قاي‬ ‫م‬ ‫ال‬ :‫قراا‬ ‫ف‬ ‫ال‬ ‫أ‬ ‫إل‬ ‫اا‬ ‫ثري‬ ‫األ‬ ‫من‬ ‫ق‬‫خ‬
.‫"ةيداصتقلاا‬ ‫لمعلل"ةكعكلا‬ ‫جاتنلإاو‬ ، ‫صلقيو‬ ‫مجح‬
use as
classroom use.
PRINCIPLE #2:
The Cost of Something Is What You Give Up to Get It
‫نه‬ ‫م‬ ‫ي‬‫ل‬ ‫تخ‬ ‫ال‬ ‫نك‬ ‫ك‬ ‫م‬ ‫ي‬ ‫ما‬ ‫ما‬ ‫يا‬‫ش‬ ‫فة‬ ‫ل‬ ‫ك‬ ‫ت‬

▪ Making decisions requires comparing the costs and benefits of
alternative choices.
▪ The opportunity cost of any item is whatever must be given
up‫مهم‬
to obtain it.
▪ It is the relevant cost for decision making.
▪ .‫بلطتي‬ ‫ذاختا‬ ‫تارارقلا‬ ‫ةنراقم‬ ‫فيلاكت‬ ‫دئاوفو‬ ‫تارايخلا‬
‫لة‬ ‫ي‬ ‫ب‬ ‫ال‬
▪ .‫لوصحلل‬ ‫ع‬ ‫ي‬ ‫أل‬ ‫لة‬ ‫ي‬ ‫ب‬ ‫ال‬ ‫صة‬ ‫فر‬ ‫ال‬ ‫فة‬ ‫ل‬ ‫ك‬ ‫ت‬ ‫يه‬ ‫ل‬ ‫م‬ ‫نه‬ ‫م‬ ‫ي‬‫ل‬ ‫تخ‬ ‫يهال‬ ‫ل‬
‫جي‬ ‫ي‬ ‫ما‬ ‫هي‬ ‫ر‬ ‫ن‬ ‫م‬
▪ ‫اهنإ‬ ‫ةفلكتلا‬ ‫تاذ‬ ‫ةلصلا‬ ‫ذاختلا‬ ‫رارقلا‬
use as
classroom use.
PRINCIPLE #2:
The Cost of Something Is
What You Give Up to Get It
Examples:

The opportunity cost of…
…going to college for a year is not just the tuition, books, and
fees, but also
the foregone wages.
…seeing a movie is not just the price of the ticket,
but the value of the time you spend in the theater.
...‫ةفلكت‬ ‫ةصرفلا‬ ‫ةليدبلا‬
‫ال‬ ‫قط‬ ‫ف‬ ‫يس‬ ‫ل‬ ‫مام‬ ‫ة‬ ‫م‬ ‫ل‬ ‫ية‬ ‫ل‬ ‫ك‬ ‫ال‬ ‫أ‬ ‫إل‬ ‫ذهاب‬ ‫ال‬ ، ‫تي‬ ‫ك‬ ‫وال‬ ، ‫ية‬ ‫س‬ ‫را‬ ‫ال‬ ‫سعم‬ ‫ر‬
... ‫جعر‬ ‫األ‬ ‫اا‬ ‫أي‬ ‫كن‬ ‫ول‬ ، ‫سعم‬ ‫ر‬ ‫وال‬
.‫ةعئاضلا‬
‫ذي‬ ‫ال‬ ‫ق‬ ‫عل‬ ‫ال‬ ‫يمة‬ ‫ل‬ ‫ق‬ ‫ب‬ ، ‫رة‬ ‫تذك‬ ‫ال‬ ‫عر‬ ‫س‬ ‫مجرد‬ ‫يس‬ ‫ل‬ ‫لم‬ ‫ي‬ ‫ف‬ ‫ة‬ ‫رؤي‬
...‫سرح‬ ‫م‬ ‫ال‬ ‫ي‬ ‫ف‬ ‫يه‬ ‫ا‬ ‫ق‬ ‫ت‬
use as
classroom use.
PRINCIPLE #3:
Rational People Think at the Margin
‫هامش‬ ‫ال‬ ‫ي‬ ‫ف‬ ‫كرون‬ ‫ف‬ ‫ي‬ ‫قالا‬ ‫ع‬ ‫ال‬
Rational people

▪ systematically and purposefully do the best they can to
achieve their objectives.
▪ make decisions by evaluating costs and benefits of
marginal changes, incremental adjustments to an
existing plan.
▪ ‫صاخش‬ ‫نيينلاقع‬
▪ .‫لكشب‬ ‫يجهنم‬ ‫لداعو‬ ‫لا‬ ‫يق‬ ‫ق‬ ‫تح‬ ‫ل‬ ‫عهم‬ ‫س‬ ‫و‬ ‫ي‬ ‫ف‬ ‫ما‬ ‫اق‬ ‫أف‬ ‫ب‬ ‫يام‬ ‫ل‬
‫هم‬ ‫اف‬ ‫أه‬
▪ ‫ذاختا‬ ‫تارارقلا‬ ‫نم‬ ‫للاخ‬ ‫مييقت‬ ‫فيلاكت‬ ‫دئاوفو‬ ‫تارييوتلا‬
‫ق‬ ‫ال‬ ‫ي‬ ‫ع‬ ‫ت‬ ‫وال‬ ، ‫ية‬ ‫ل‬ ‫هام‬ ‫ال‬
.‫ةيفاضلإا‬ ‫ةطخل‬ ‫ةدوجوم‬
use as
classroom use.
PRINCIPLE #3:
Rational People Think at the Margin
Examples:
▪ When a student considers whether to go to college for an
additional

year, he compares the fees & foregone wages to the extra
income
he could earn with the extra year of education.
▪ When a manager considers whether to increase output, she
compares the cost of the needed labor and materials to the extra
revenue.
▪ :‫ةلثمأ‬
▪ ‫امدنع‬ ‫سردي‬ ‫بلاطلا‬ ‫ام‬ ‫اذإ‬ ‫ناك‬ ‫بهذيس‬ ‫ىلإ‬ ‫ةيلكلا‬ ‫ةدمل‬ ‫ماع‬ ‫يفاضإ‬
، ‫نإف‬ ‫ه‬ ‫ي‬‫رال‬ ‫ن‬ ‫رلا‬ ‫س‬ ‫مع‬ ‫لأاو‬ ‫روج‬
.‫ةعئاضلا‬ ‫لخدلاب‬ ‫يفاضلإا‬ ‫يذلا‬ ‫نكمي‬ ‫نأ‬ ‫هبسكي‬ ‫عم‬ ‫ةنسلا‬
‫يم‬ ‫ل‬ ‫ع‬ ‫ت‬ ‫ل‬ ‫ل‬ ‫ية‬ ‫ااف‬ ‫اإل‬
▪ ‫امدنع‬ ‫سردي‬ ‫ريدملا‬ ‫ام‬ ‫اذإ‬ ‫ناك‬ ‫متيس‬ ‫دايز‬ ‫قارن‬ ‫ت‬ ‫ها‬ ‫إن‬ ‫ف‬ ، ‫تاج‬ ‫ن‬ ‫اإل‬ ‫ة‬
‫ة‬ ‫لعب‬ ‫مر‬ ‫ال‬ ‫معاد‬ ‫وال‬ ‫ة‬ ‫عمال‬ ‫ال‬ ‫فة‬ ‫ل‬ ‫ك‬ ‫ت‬
.‫تاداريلإاب‬ ‫ةيفاضلإا‬
use as
classroom use.
PRINCIPLE #4:
People Respond to Incentives ‫سانلا‬ ‫نوبيجتسي‬
‫ا‬ ‫لحعاف‬ ‫ل‬
▪ Incentive: something that induces a person to act, i.e.

the prospect of a reward or punishment.
▪ ‫ايشةبوقعلا‬ ‫ضرحي‬ ‫صخشلا‬ ‫ىلع‬ ‫فرصتلا‬ ، ‫يأ‬ ‫لامتحا‬ ‫ةأفاكملا‬
‫ا‬ ‫حاف‬ ‫ال‬ : ‫أو‬
▪ Rational people respond to incentives.
Examples:
▪ When gas prices rise, consumers buy more hybrid cars and
fewer gas guzzling
SUVs.
▪ When cigarette taxes increase,
teen smoking falls.
▪ .‫بيجتسي‬ ‫نوينلاقعلا‬ ‫زفاوحلل‬
▪ :‫ةلثمأ‬
▪ ‫امدنع‬ ‫عفترت‬ ‫راعسأ‬ ‫زاولا‬ ، ‫يرتشي‬ ‫نوكلهتسملا‬ ‫ديزملا‬ ‫نم‬
‫ي‬ ‫ام‬ ‫رب‬ ‫ال‬ ‫ع‬ ‫ف‬ ‫ال‬ ‫يارات‬ ‫س‬ ‫من‬ ‫ق‬ ‫أل‬ ‫د‬ ‫وم‬ ‫نة‬ ‫ي‬ ‫هج‬ ‫ال‬ ‫يارات‬ ‫س‬ ‫ال‬
.‫يتلا‬ ‫كلهتست‬ ‫تايمك‬ ‫ةريبك‬ ‫نم‬ ‫زاولا‬
▪ .‫امدنع‬ ‫ديزت‬ ‫بئارضلا‬ ‫ىلع‬ ‫رئاجسلا‬ ، ‫ني‬ ‫سن‬ ‫ي‬ ‫ف‬ ‫ين‬ ‫خ‬ ‫ت‬ ‫ال‬ ‫فض‬ ‫خ‬
‫قة‬ ‫مراه‬ ‫ال‬
use as

classroom use.
ACTIVE LEARNING 1
Applying the principles
You are selling your 1996 Mustang. You have already spent
$1000 on repairs.
At the last minute, the transmission dies. You can pay $600 to
have it repaired, or sell the
car “as is.”
In each of the following scenarios, should you have the
transmission repaired? Explain.
.‫رلاود‬ ‫ىلع‬ ‫تاحلاصلإا‬ 1000‫دقل‬ ‫تقفنأ‬ ‫لعفلاب‬ . 1996‫صاخلا‬ ‫كب‬
‫ق‬ ‫ان‬ ‫ج‬ ‫تان‬ ‫س‬ ‫مع‬ ‫عق‬ ‫ب‬ ‫مام‬
".‫امك‬ ‫رلاود"يه‬ ‫اهحلاصلإ‬ ، ‫وأ‬ ‫عيب‬ ‫ةرايسلا‬ 600‫كنكمي‬ ‫عفد‬ .
، ‫يرة‬ ‫خ‬ ‫األ‬ ‫قة‬ ‫ي‬ ‫ل‬ ‫ال‬ ‫ي‬‫ف‬ ‫سال‬ ‫ر‬ ‫اإل‬ ‫عرق‬ ‫ت‬ ‫ي‬
.‫يفحرشا‬ ‫لك‬ ‫نم‬ ‫تاهويرانيسلا‬ ‫ةيلاتلا‬ ، ‫له‬ ‫بجي‬ ‫نأ‬ ‫متي‬ ‫حلاصإ‬
‫ة؟‬ ‫حرك‬ ‫ال‬ ‫ق‬ ‫ال‬ ‫ن‬
A. Blue book value (what you could get for the car) is $6500 if
transmission works,
$5700 if it doesn’t
B. Blue book value is $6000 if transmission works,
‫أن‬ ‫كن‬ ‫م‬ ‫ي‬ ‫ما‬ ( ‫ي‬ ‫ه‬0056 ‫ان‬ ‫ك‬ ‫إذا‬ ‫ر‬ ‫دوال‬ ‫ق‬ ‫نال‬ ‫ال‬ ، ‫عمق‬ ‫ي‬0075 ‫م‬ ‫ل‬ ‫إذا‬ ‫ر‬ ‫دوال‬
‫أ‬ . ‫اا‬ ‫ارل‬ ‫ال‬ ‫ة‬ ‫تري‬ ‫ف‬ ‫ال‬ ‫يمة‬ ‫ق‬ ‫يارة)ال‬ ‫س‬ ‫ل‬ ‫ل‬ ‫يه‬ ‫ل‬ ‫م‬ ‫ق‬ ‫ح‬ ‫ت‬
‫ك‬ ‫ذل‬ ‫ك‬ ‫كن‬ ‫ي‬

، ‫عمق‬ ‫ي‬ ‫سال‬ ‫ر‬ ‫اإل‬ ‫ان‬ ‫ك‬ ‫إذا‬ ‫ر‬ ‫دوال‬0055 ‫ك‬ ‫ذل‬ ‫ك‬ ‫كن‬ ‫ي‬ ‫م‬ ‫ل‬ ‫إذا‬ ‫ي‬‫ك‬ ‫ري‬‫أم‬ ‫ر‬ ‫دوال‬
6000‫ةميق‬ ‫باتكلا‬ ‫قرزلأا‬ ‫يه‬
use as
classroom use.
use as
classroom use.
ACTIVE LEARNING 1
Answers
Cost of fixing transmission = $600
A. Blue book value is $6500 if transmission works,
Benefit of fixing the transmission = $800
($6500 – 5700).
It’s worthwhile to have the transmission fixed.

‫يق‬ ‫ب‬ ‫ث‬ ‫ت‬ ‫فة‬ ‫ل‬ ‫ك‬ ‫ت‬ ‫ق‬ ‫نال‬ ‫ال‬ =006 ‫ر‬ ‫دوال‬
‫ي‬ ‫ه‬0056 ، ‫سال‬ ‫ر‬ ‫اإل‬ ‫عمق‬ ‫ي‬ ‫ان‬ ‫ك‬ ‫إذا‬ ‫ر‬ ‫دوال‬0075 ‫م‬ ‫ل‬ ‫إذا‬ ‫ر‬ ‫وال‬ ‫ل‬ ‫عم‬ ‫ي‬ ‫كن‬ ‫ي‬
‫اا‬ ‫ارل‬ ‫ال‬ ‫ة‬ ‫تري‬ ‫ف‬ ‫ال‬ ‫يمة‬ ‫ال‬ ‫ل‬
).‫رلاود‬ 5700 - 6500(‫رلاود‬ 800= ‫ةدئاف‬ ‫تابث‬ ‫لقانلا‬
.‫ا‬‫ف‬‫ت‬‫جاب‬ ‫النقق‬ ‫يكعن‬ ‫أن‬ ‫بنا‬ ‫ير‬ ‫الج‬ ‫من‬
B. Blue book value is $6000 if transmission works,
Benefit of fixing the transmission is only $500.
Paying $600 to fix transmission is not worthwhile.
‫ان‬ ‫ك‬ ‫إذا‬ ‫ر‬ ‫دوال‬ ‫ق‬ ‫نال‬ ‫ال‬ ، ‫عمق‬ ‫ي‬0055 ‫م‬ ‫ل‬ ‫إذا‬ ‫ر‬ ‫وال‬ ‫ل‬ ‫عم‬ ‫ي‬ ‫كن‬ ‫ي‬
6000‫ةميقلا‬ ‫ةيرتفدلا‬ ‫ااقرزلا‬ ‫ه‬ ‫ي‬
.‫رلاود‬ ‫طقف‬ 500‫ولبت‬ ‫ةدئاف‬ ‫حلاصإ‬ ‫لاسرلإا‬
‫ع‬ ‫دف‬006 ‫ح‬ ‫ال‬ ‫إل‬ ‫ر‬ ‫دوال‬ ‫سق‬ ‫ي‬ ‫ل‬ ‫ق‬ ‫نال‬ ‫تمامال‬ ‫ه‬ ‫اال‬ ‫ب‬ ‫رة‬ ‫ي‬ ‫ج‬
use as
classroom use.
use as

classroom use.
ACTIVE LEARNING 1
Observations
▪ The $1000 you previously spent on repairs is irrelevant.
What matters is the cost and benefit
of the marginal repair (the transmission).
▪ The change in incentives from scenario A
to scenario B caused your decision to change.
▪ . ‫صلة‬ ‫ذي‬ ‫غير‬ ‫الحات‬ ‫اإل‬ ‫ملأ‬ ‫ا‬‫ف‬‫ق‬‫ساب‬ ‫أنفقته‬ ‫الذي‬ ‫دوالر‬1000‫ولبم‬
).‫صلإا(لاسرلإا‬‫حلا‬ ‫يشماهلا‬ ‫ام‬ ‫مهي‬ ‫وه‬ ‫ةفلكتلا‬ ‫من‬ ‫فادة‬ ‫ت‬ ‫س‬ ‫واال‬
▪ ‫ببست‬ ‫رييوتلا‬ ‫يف‬ ‫زفاوحلا‬ ‫نم‬ ‫ويرانيسلا‬ ‫أ‬ ‫ىلإ‬ ‫ويرانيسلا‬ ‫ب‬
‫ير‬ ‫ي‬ ‫غ‬ ‫ت‬ ‫ي‬ ‫ف‬
‫ك‬‫رار‬ ‫ل‬
use as
classroom use.
The principles of

HOW PEOPLE
INTERACT
‫ق‬‫فام‬ ‫ت‬ ‫ت‬ ‫يف‬ ‫ك‬ ‫بادئ‬ ‫م‬
‫ناس‬ ‫ال‬
use as
classroom use.
PRINCIPLE #5:
Trade Can Make Everyone Better Off
‫مك‬ ‫ي‬ ‫تجارة‬ ‫حاالال‬ ‫اق‬ ‫أف‬ ‫ع‬‫ي‬ ‫جم‬ ‫ال‬ ‫عق‬ ‫ج‬ ‫ت‬ ‫أن‬ ‫ن‬
▪ Rather than being self-sufficient,
people can specialize in producing one good or service
and exchange it for other goods.
▪ ‫مة‬ ‫خ‬ ‫أو‬ ‫سلعة‬ ‫إنتاج‬ ‫في‬ ‫عا‬ ‫يتخ‬ ‫أن‬ ‫للناس‬ ‫يمكن‬ ، ‫الذاتي‬ ‫االكتفاا‬ ‫من‬ ‫ف‬‫ل‬‫ا‬ ‫وب‬
‫ها‬ ‫عن‬ ‫بادل‬ ‫ت‬ ‫وي‬ ‫ة‬ ‫واح‬
.‫م‬ ‫رى‬ ‫أخ‬ ‫ع‬‫ل‬ ‫س‬ ‫ق‬ ‫أج‬ ‫ن‬
▪
▪ Countries also benefit from trade and specialization:
▪ Get a better price abroad for goods they produce

▪ Buy other goods more cheaply from abroad than could be
produced at
home
▪ :‫ت‬ ‫والتخ‬ ‫التجارة‬ ‫من‬ ‫اا‬‫ف‬‫ي‬‫أ‬ ‫ان‬ ‫البل‬ ‫تستفي‬
▪ ‫لوصحلا‬ ‫ىلع‬ ‫رعس‬ ‫لضفأ‬ ‫يف‬ ‫جراخلا‬ ‫عئاضبلل‬ ‫يتلا‬ ‫اهجتنت‬
▪ ‫اارش‬ ‫علسلا‬ ‫ىرخلأا‬ ‫رعسب‬ ‫صخرأ‬ ‫نم‬ ‫جراخلا‬ ‫امم‬ ‫نكمي‬ ‫هجاتنإ‬ ‫يف‬
‫نال‬ ‫م‬ ‫ال‬
use as
classroom use.
PRINCIPLE #6:
Markets Are Usually A Good Way to Organize Economic
Activity
‫ي‬‫نظ‬ ‫ت‬ ‫ل‬ ‫ة‬ ‫ي‬ ‫ج‬ ‫لة‬ ‫ي‬ ‫س‬ ‫و‬ ‫كعن‬ ‫ت‬ ‫ما‬ ‫مادة‬ ‫سعاق‬ ‫ياأل‬‫اد‬ ‫ت‬ ‫ق‬ ‫اال‬ ‫لاط‬ ‫ن‬ ‫ال‬ ‫م‬
▪ Market: a group of buyers and sellers )need not be in a
single location)
▪ )‫لا‬ ‫بجي‬ ‫نأ‬ ‫اونوكي‬ ‫يف‬ ‫ناكم‬ ‫ةعومجم(دحاو‬ ‫نم‬ ‫نيرتشملا‬
‫سعق‬ ‫ال‬ : ‫ين‬ ‫ع‬ ‫بائ‬ ‫وال‬
▪ “Organize economic activity” means determining

▪ what goods to produce
▪ how to produce them
▪ how much of each to produce
▪ who gets them
▪ ‫ينعي‬ ‫ميظنت"ديدحت‬ ‫طاشنلا‬ ‫يداصتقلاا‬
▪ ‫ام‬ ‫يه‬ ‫علسلا‬ ‫يتلا‬ ‫اهجتنن‬
▪ ‫ةيفيك‬ ‫اهجاتنإ‬
▪ ‫مك‬ ‫ددع‬ ‫لك‬ ‫دحاو‬ ‫هجاتنلا‬
▪ ‫نم‬ ‫لصحي‬ ‫مهيلع‬
use as
classroom use.
PRINCIPLE #6:
Markets Are Usually A Good Way to Organize Economic
Activity
▪ A market economy allocates resources through the
decentralized
decisions of many households and firms as they interact in
markets.

▪ ‫صصخي‬ ‫داصتقا‬ ‫قوسلا‬ ‫دراوملا‬ ‫نم‬ ‫للاخ‬ ‫تارارقلا‬ ‫ةيزكرملالا‬
‫ع‬ ‫ات‬ ‫لرك‬ ‫وال‬ ‫سر‬ ‫األ‬ ‫من‬ ‫ي‬ ‫ع‬ ‫ل‬ ‫ل‬ ‫ق‬‫فام‬ ‫ت‬ ‫ت‬ ‫ما‬ ‫ن‬
‫ي‬‫ف‬ ‫سعال‬ ‫األ‬
▪ Famous insight by Adam Smith in The Wealth of Nations
(1776):
Each of these households and firms acts as if “led by an
invisible hand” to promote general economic well-being.
use as
classroom use.
PRINCIPLE #6:
Markets Are Usually A Good Way to Organize
Economic Activity
▪ The invisible hand works through the price system:
▪ The interaction of buyers and sellers
determines prices.
▪ Each price reflects the good’s value to buyers and the cost of
producing

the good.
▪ Prices guide self-interested households and firms to make
decisions
that, in many cases, maximize society’s economic well-being.
▪ :‫لمعت‬ ‫ديلا‬ ‫ةيفخلا‬ ‫نم‬ ‫للاخ‬ ‫ماظن‬ ‫راعسلأا‬
▪ ‫لعافت‬ ‫نيعئابلا‬ ‫نيرتشملاو‬ ‫ددحي‬ ‫راعسلأا‬
▪ .‫سكعي‬ ‫لك‬ ‫رعس‬ ‫ةميق‬ ‫سلا‬ ‫فة‬ ‫ل‬ ‫ك‬ ‫وت‬ ‫ن‬ ‫تري‬ ‫ل‬ ‫لم‬ ‫ل‬ ‫بة‬ ‫س‬ ‫ن‬ ‫ال‬ ‫ب‬ ‫عة‬ ‫ل‬
‫عة‬ ‫ل‬ ‫س‬ ‫ال‬ ‫تاج‬ ‫إن‬
▪ ‫هجوتو‬ ‫راعسلأا‬ ‫رسلأاب‬ ‫تاكرشلاو‬ ‫ةمتهملا‬ ‫ايتاذ‬ ‫ذاختلا‬ ‫تارارق‬
‫اه‬ ‫رف‬ ‫من‬ ‫ق‬ ‫حاال‬ ‫ال‬ ‫من‬ ‫ير‬ ‫ث‬ ‫ك‬ ‫ي‬ ‫ف‬ ‫اي‬ ‫ت‬
.‫عمتجملا‬ ‫يداصتقلاا‬
use as
classroom use.
PRINCIPLE #7:
Governments Can Sometimes Improve Market Outcomes
‫ف‬ ‫كعمات‬ ‫لح‬ ‫ل‬ ‫كن‬ ‫م‬ ‫سعقي‬ ‫ال‬ ‫ج‬ ‫تائ‬ ‫ن‬ ‫ين‬ ‫س‬ ‫ح‬ ‫ت‬ ‫يان‬ ‫ح‬ ‫األ‬ ‫عض‬ ‫ب‬ ‫ي‬
▪ Important role for govt: enforce property rights
(with police, courts)

▪ People are less inclined to work, produce, invest, or purchase
if
large risk of their property being stolen.
▪ )‫عم‬ ‫ةطرشلا‬ ‫ذافنإ(مكاحملاو‬ ‫كعمة‬ ‫لح‬ ‫ل‬ ‫هام‬ ‫دور‬ : ‫ية‬ ‫ك‬ ‫ل‬ ‫م‬ ‫ال‬ ‫قعق‬ ‫ح‬
▪ ‫خرر‬ ‫هناك‬ ‫كان‬ ‫إذا‬ ‫اللراا‬ ‫أو‬ ‫االستثمار‬ ‫أو‬ ‫اإلنتاج‬ ‫أو‬ ‫العمق‬ ‫إلأ‬ ‫ف‬‫ل‬‫ميا‬ ‫ألق‬ ‫الناس‬
‫ة‬ ‫سرل‬ ‫من‬ ‫ير‬ ‫ب‬ ‫ك‬
.‫مهتاكلتمم‬
use as
classroom use.
PRINCIPLE #7:
Governments Can Sometimes Improve Market
Outcomes
‫مهم‬
▪ Market failure: when the market fails to allocate society’s
resources
efficiently
▪ ‫امدنعةاافكب‬ ‫لشفي‬ ‫قوسلا‬ ‫يف‬ ‫صيصخت‬ ‫دراوم‬ ‫عمتجملا‬ : ‫لشف‬
‫سعق‬ ‫ال‬

▪ Causes of market failure:
▪ Externalities, when the production or consumption
of a good affects bystanders (e.g. pollution)
▪ Market power, a single buyer or seller has substantial
influence on
market price
(e.g. monopoly)
▪ :‫بابسأ‬ ‫لشف‬ ‫قوسلا‬
▪ )‫لثم‬ ‫لماوعلا(ثولتلا‬ ‫ةيجراخلا‬ ، ‫امدنع‬ ‫رثؤي‬ ‫جاتنإ‬ ‫وأ‬ ‫كلاهتسا‬
‫مارة‬ ‫ال‬ ‫أ‬‫ل‬ ‫م‬ ‫عة‬ ‫ل‬ ‫س‬ ‫ال‬
▪ )‫ىلع‬ ‫ليبس‬ ‫لاثملا‬ ‫وأ(راكتحلاا‬ ‫عئابلا‬ ‫ا‬ ‫ير‬ ‫ب‬ ‫ك‬ ‫ير‬ ‫أج‬ ‫ت‬ ‫ه‬ ‫ل‬ ‫عاح‬ ‫ل‬
، ‫سعق‬ ‫ال‬ ‫عة‬ ‫ل‬ ‫تري‬ ‫ل‬ ‫م‬ ‫ال‬ ‫سعق‬ ‫ال‬ ‫عر‬ ‫س‬ ‫أ‬‫ل‬ ‫م‬
▪ Public policy may promote efficiency. .‫ةسايسلا‬ ‫ةماعلا‬ ‫دق‬
‫فااة‬ ‫ك‬ ‫ال‬ ‫عاز‬ ‫ت‬
use as
classroom use.
PRINCIPLE #7:

Governments Can Sometimes
Improve Market Outcomes
▪ Govt may alter market outcome to promote equity.
▪ ‫دق‬ ‫ريوت‬ ‫ةموكحلا‬ ‫نم‬ ‫جئاتن‬ ‫قوسلا‬ ‫زيزعتل‬ ‫ةلادعلا‬
▪ If the market’s distribution of economic well-being is not
desirable, tax
or welfare policies can change how the economic “pie” is
divided.
▪ ‫اذإ‬ ‫مل‬ ‫نكي‬ ‫عيزوت‬ ‫قوسلا‬ ‫هافرلل‬ ‫يداصتقلاا‬ ‫إن‬ ‫ف‬ ، ‫يه‬ ‫ف‬ ‫ا‬ ‫عب‬‫مرغ‬
‫ية‬ ‫تمام‬ ‫ج‬ ‫اال‬ ‫أو‬ ‫ية‬ ‫ب‬ ‫اري‬ ‫ال‬ ‫سات‬ ‫يا‬ ‫س‬ ‫ال‬
‫يم‬ ‫س‬ ‫ق‬ ‫ت‬ ‫ية‬ ‫ف‬ ‫ي‬ ‫ك‬ ‫ير‬ ‫غ‬ ‫ت‬ ‫أن‬ ‫كن‬ ‫م‬ ‫كة"ي‬ ‫ع‬ ‫ك‬ ‫ال‬ "‫ة‬ ‫ادي‬ ‫ت‬ ‫ق‬ ‫اال‬
use as
classroom use.
ACTIVE LEARNING 2
Discussion Question
In each of the following situations, what is the

government’s role? Does the government’s
intervention improve the outcome?
a. Public schools for K-12
b. Workplace safety regulations
c. Public highways
d. Patent laws, which allow drug companies to
charge high prices for life-saving drugs
use as
classroom use.
The principles of
HOW THE
ECONOMY
AS A WHOLE
WORKS
‫اد‬ ‫ت‬ ‫ق‬ ‫اال‬ ‫بادئ‬ ‫م‬
‫لة‬ ‫ام‬ ‫ك‬ ‫أممال‬ ‫ك‬

use as
classroom use.
PRINCIPLE #8:
A Country’s Standard of Living Depends on Its Ability to
Produce
Goods & Services
‫ع‬‫ل‬ ‫س‬ ‫ال‬ ‫تاج‬ ‫إن‬ ‫أ‬‫ل‬ ‫م‬ ‫ه‬ ‫رت‬ ‫ل‬ ‫أ‬‫ل‬ ‫م‬ ‫ل‬ ‫ب‬ ‫ل‬ ‫ل‬ ‫لة‬ ‫ي‬ ‫ع‬ ‫م‬ ‫ال‬ ‫تعى‬ ‫س‬ ‫م‬ ‫تم‬ ‫ع‬ ‫ي‬
‫مات‬ ‫خ‬ ‫وال‬
▪ Huge variation in living standards across countries and
over time:
▪ :‫فلاتخا‬ ‫ريبك‬ ‫يف‬ ‫تايوتسم‬ ‫ةشيعملا‬ ‫ربع‬ ‫نادلبلا‬ ‫ربعو‬ ‫نمزلا‬
▪ Average income in rich countries is more than ten times
average
income in poor countries.
▪ The U.S. standard of living today is about
eight times larger than 100 years ago.
▪ .‫طسوتم‬ ‫لخدلا‬ ‫يف‬ ‫نادلبلا‬ ‫ةينولا‬ ‫وه‬ ‫رثكأ‬ ‫نم‬ ‫ةرشع‬ ‫فاعضأ‬
‫يرة‬ ‫ق‬ ‫ف‬ ‫ال‬ ‫ان‬ ‫ل‬ ‫ب‬ ‫ال‬ ‫ي‬ ‫ف‬ ‫ق‬‫خ‬ ‫ال‬ ‫سط‬ ‫تع‬ ‫م‬

▪ .‫ماع‬ 100‫ولبي‬ ‫ىوتسم‬ ‫ةشيعملا‬ ‫يف‬ ‫تايلاولا‬ ‫ةدحتملا‬ ‫مويلا‬
‫بق‬ ‫ل‬ ‫يه‬ ‫ل‬ ‫م‬ ‫ان‬ ‫ك‬ ‫ما‬ ‫عاف‬ ‫ض‬ ‫أ‬ ‫ية‬ ‫مان‬ ‫ج‬
use as
classroom use.
PRINCIPLE #8:
A Country’s Standard of Living Depends on Its Ability to
Produce
Goods & Services
▪ The most important determinant of living standards:
productivity,
the amount of goods and services produced per unit of labor.
▪ ‫ةيجاتنلإا‬ ، ‫ةيمكو‬ ‫علسلا‬ ‫تامدخلاو‬ ‫تنملا‬ ‫أهم‬ : ‫من‬ ‫ة‬ ‫وح‬ ‫كق‬ ‫ل‬ ‫جة‬
‫لة‬ ‫ي‬ ‫ع‬ ‫م‬ ‫ال‬ ‫ات‬ ‫تعي‬ ‫س‬ ‫م‬ ‫ل‬ ‫دة‬ ‫مح‬ ‫ال‬ ‫ععامق‬ ‫ال‬
.‫ةلامعلا‬
▪ Productivity depends on the equipment, skills, and technology
available to workers.
▪ .‫دمتعت‬ ‫ةيجاتنلإا‬ ‫ىلع‬ ‫تادعملا‬ ‫تاراهملاو‬ ‫ايجولونكتلاو‬ ‫ةحاتملا‬
‫عمال‬ ‫ل‬ ‫ل‬
▪ Other factors )e.g., labor unions, competition from abroad)
have far

less impact on living standards.
▪ ‫اهل‬ ‫ريثأت‬ ‫لقأ‬ ‫ريثكب‬ ‫ىلع‬ ‫تايوتسم‬ ) ‫لثم‬ ‫تاباقنلا‬ ‫ةيلامعلا‬ ،
‫رى‬ ‫أخ‬ ‫عامق‬‫م‬ ‫ناك‬ ‫خارج)ه‬ ‫ال‬ ‫من‬ ‫سة‬ ‫ناف‬ ‫م‬ ‫ال‬
‫لة‬ ‫ي‬ ‫ع‬ ‫م‬ ‫ال‬
use as
classroom use.
PRINCIPLE #9:
Prices Rise When the Government Prints Too Much
Money
‫مال‬ ‫ال‬ ‫من‬ ‫ير‬ ‫ث‬ ‫ك‬ ‫ال‬ ‫كعمة‬ ‫ح‬ ‫ال‬ ‫ع‬ ‫ب‬ ‫ر‬ ‫ت‬ ‫ما‬ ‫ن‬ ‫م‬ ‫عار‬ ‫س‬ ‫األ‬ ‫ع‬‫ف‬ ‫رت‬ ‫ت‬
▪ Inflation: increases in the general level of prices.
▪ .‫تادايزلا‬ ‫يف‬ ‫ىوتسملا‬ ‫ماعلا‬ ‫راعسلأل‬: ‫مخضتلا‬
▪ In the long run, inflation is almost always caused by excessive
growth
in the quantity of money, which causes the value of money to
fall.

▪ ‫المال‬ ‫كمية‬ ‫في‬ ‫المفرط‬ ‫النمع‬ ‫بسبي‬ ‫التاخم‬ ‫ث‬ ‫يح‬ ‫ما‬ ‫ف‬‫ا‬‫غالب‬ ، ‫الرعيق‬ ‫ى‬ ‫الم‬ ‫ملأ‬
، ‫امم‬ ‫ؤي‬ ‫ي‬ ‫لإ‬ ‫ى‬
.‫ضافخنا‬ ‫ةميق‬ ‫لاملا‬
▪ The faster the govt creates money, the greater the inflation
rate.
▪ .‫املك‬ ‫تداز‬ ‫ةموكحلا‬ ‫نم‬ ‫ديلوت‬ ‫لاملا‬ ، ‫داز‬ ‫لدعم‬ ‫مخضتلا‬
use as
classroom use.
PRINCIPLE #10:
Society Faces a Short-run Tradeoff Between Inflation and
Unemployment
‫ة‬ ‫برال‬ ‫وال‬ ‫اخم‬ ‫ت‬ ‫ال‬ ‫ين‬ ‫ب‬ ‫ى‬ ‫م‬ ‫ال‬ ‫يرة‬ ‫ل‬ ‫قة‬ ‫ف‬ ‫ص‬ ‫عاجه‬ ‫ي‬ ‫ع‬‫تم‬ ‫مج‬ ‫ال‬
▪ In the short-run (1–2 years),
many economic policies push inflation and unemployment
in opposite directions.
▪ ، ‫عفدت‬ ‫ديدعلا‬ ‫نم‬ ‫تاسايسلا‬ ‫ةيداصتقلاا‬ ‫مخضتلا‬ ‫ةلاطبلاو‬ ‫يف‬
2 ‫نة‬ ‫س‬ ( ‫ين‬ ‫جاه‬ ‫ات‬-1(‫يف‬ ‫ىدملا‬ ‫ريصقلا‬
.‫نيسكاعتم‬

▪
▪ Other factors can make this tradeoff more or less
favorable, but the tradeoff is always present.
▪ ‫وأ‬ ‫لقأ‬ ‫ةيتاوم‬ ، ‫نكل‬ ‫ةضياقملا‬ ‫ةدوجوم‬ ‫هلدابملا‬ ‫هيراجتلا‬ ‫رثكأ‬
‫هذه‬ ‫عق‬ ‫ج‬ ‫ت‬ ‫أن‬ ‫كن‬ ‫م‬ ‫ي‬ ‫رى‬ ‫أخ‬ ‫عامق‬‫م‬
.‫ف‬‫ا‬‫دائم‬
▪
use as
classroom use.
FYI: How to Read Your Textbook
1. Read before class.
You’ll get more out of class.
2. Summarize, don’t highlight.
Highlighting is a passive activity that won’t
improve your comprehension or retention.
Instead, summarize each section in your own

words. Then, compare your summary to the one
at the end of the chapter.
use as
classroom use.
3. Test yourself.
Try the “Quick Quiz” that follows each section
before moving on to the next section.
Write your answers down, compare them to the
answers in the back of the book. If your answers
are incorrect, review the section before moving on.
4. Practice, practice, practice.
Work through the end-of-chapter review questions
and problems. They are often good practice for
the exams. And the more you use your new
knowledge, the more solid it will become.
use as

classroom use.
5. Go online.
The book comes with excellent web resources,
including practice quizzes, tools to strengthen
your graphing skills, helpful video clips, and other
resources to help you learn the textbook material
more easily and effectively. Visit:
http://academic.cengage.com/economics/mankiw
6. Study in groups.
Get together with a few classmates to review each
chapter, quiz each other, and help each other
understand the material.
use as
classroom use.
7. Teach someone.
The best way to learn something is to teach it to
someone else, such as a study partner or friend.
8. Don’t skip the real world examples.
Read the Case Studies and “In The News” boxes
in each chapter. They will help you see how the

new terms, concepts, models, and graphs apply to
the real world. As you read the newspaper or
watch the evening news, see if you can find the
connections with what you’re learning in the
textbook.
http://academic.cengage.com/economics/mankiw
use as
classroom use.
SUMMARY
The principles of decision making are:
• People face tradeoffs.
• The cost of any action is measured in terms of foregone
opportunities.
• Rational people make decisions by comparing marginal costs
and
marginal benefits.
• People respond to incentives.
• :‫ئدابم‬ ‫عنص‬ ‫رارقلا‬ ‫يه‬

• .‫تلادابملا‬ ‫سانلاهيراجتلا‬ ‫هجاوي‬
• .‫متي‬ ‫سايق‬ ‫ةفلكت‬ ‫يأ‬ ‫اارجإ‬ ‫نم‬ ‫ثيح‬ ‫صرفلا‬ ‫ةعئاضلا‬
• .‫نوينلاقعلا‬ ‫نوذختي‬ ‫تارارقلا‬ ‫نم‬ ‫للاخ‬ ‫ةنراقم‬ ‫فيلاكتلا‬
‫فع‬ ‫وال‬ ‫ية‬ ‫ل‬ ‫هام‬ ‫ال‬ ‫ية‬ ‫ل‬ ‫هام‬ ‫ال‬ ‫ائ‬
• .‫سانلا‬ ‫نوبيجتسي‬ ‫زفاوحلل‬
use as
classroom use.
use as
classroom use.
SUMMARY
The principles of interactions among people are:
• Trade can be mutually beneficial.
• Markets are usually a good way of coordinating trade.
• Govt can potentially improve market outcomes if there is a
market

failure or if the market outcome is inequitable.
• :‫ئدابم‬ ‫لعافتلا‬ ‫نيب‬ ‫سانلا‬ ‫يه‬
• .‫نكمي‬ ‫نأ‬ ‫نوكت‬ ‫ةراجتلا‬ ‫ةديفم‬ ‫نيفرطلل‬
• .‫قاوسلأا‬ ‫يه‬ ‫ةداع‬ ‫ةقيرط‬ ‫ةديج‬ ‫قيسنتل‬ ‫ةراجتلا‬
• ‫كان‬ ‫إذا‬ ‫السعق‬ ‫نتائج‬ ‫سن‬ ‫ن‬‫ح‬‫ت‬ ‫أن‬ ‫للحكعمة‬ ‫يمكن‬ ‫إذا‬ ‫أو‬ ‫سعق‬ ‫ال‬ ‫ي‬ ‫ف‬ ‫لق‬ ‫ف‬ ‫ناك‬ ‫ه‬
‫ير‬ ‫غ‬ ‫سعق‬ ‫ال‬ ‫يجة‬ ‫ت‬ ‫ن‬ ‫ق‬ ‫ان‬ ‫ك‬
‫فة‬ ‫ن‬ ‫م‬
use as
classroom use.
use as
classroom use.
SUMMARY
The principles of the economy as a whole are:

• Productivity is the ultimate source of living standards.
• Money growth is the ultimate source of inflation.
• Society faces a short-run tradeoff between inflation and
unemployment.
• :‫ئدابم‬ ‫داصتقلاا‬ ‫لكك‬ ‫يه‬
• .‫ةيجاتنلإا‬ ‫يه‬ ‫ردصملا‬ ‫يئاهنلا‬ ‫تايوتسمل‬ ‫ةشيعملا‬
• .‫ومن‬ ‫لاملا‬ ‫وه‬ ‫ردصملا‬ ‫يئاهنلا‬ ‫مخضتلل‬
• .‫عمتجملا‬ ‫هجاوي‬ ‫ةضياقم‬ ‫ةريصق‬ ‫ىدملا‬ ‫نيب‬ ‫مخضتلا‬ ‫ةلاطبلاو‬
use as
classroom use.
1
Ten Principles of
Economics Premium
PowerPoint
Slides by
Ron Cronovich

use as
classroom use.
N. Gregory Mankiw
Macroeconomics
Principles of
Sixth Edition
use as
classroom use.
In this chapter,
• What are economists’ two roles? How do they differ?
• What are models? How do economists use them?
• What are the elements of the Circular-Flow Diagram?

What concepts does the diagram illustrate?
• How is the Production Possibilities Frontier related
to opportunity cost? What other concepts does it
illustrate?
• What is the difference between microeconomics and
macroeconomics? Between positive and normative?
use as
classroom use.
The Economist as Scientist ‫ريبخلاملاعك‬ ‫يداصتقلاا‬
▪ Economists play two roles:
1. Scientists: try to explain the world
2. Policy advisors: try to improve it
▪ In the first, economists employ the
scientific method,
the dispassionate development and testing of theories about how
the world works.

▪ :‫ي‬ ‫ن‬ ‫دوري‬ ‫عن‬ ‫ادي‬ ‫ت‬ ‫ق‬ ‫اال‬ ‫عي‬ ‫ل‬
▪ ‫لواح‬ ‫نأ‬ ‫حرشت‬ ‫ملاعلا‬: ‫ااملعلا‬. 1
▪ ‫لواح‬ ‫هنيسحت‬: ‫وراشتسم‬ ‫ةسايسلا‬. 2
▪ ‫يف‬ ‫ماقملا‬ ‫لولأا‬ ، ‫مدختسي‬ ‫نويداصتقلاا‬ ‫جهنملا‬ ‫يملعلا‬ ، ‫ةيمنتو‬
‫ية‬ ‫ف‬ ‫ي‬ ‫ك‬ ‫عل‬‫ح‬ ‫ات‬ ‫نظري‬ ‫ال‬ ‫بار‬ ‫ت‬ ‫واخ‬
‫م‬ ‫عال‬ ‫ال‬ ‫ممق‬
use as
classroom use.
Assumptions & Models ‫تاضارتفلاا‬ ‫امنلاو‬ ‫ذج‬
▪ Assumptions simplify the complex world,
make it easier to understand.
▪ Example: To study international trade,
assume two countries and two goods.
Unrealistic, but simple to learn and
gives useful insights about the real world.

.‫تاضارتفلاا‬ ‫طسبت‬ ‫ملاعلا‬ ‫دقعملا‬ ، ‫لهستو‬ ‫همهف‬
.‫ةساردل‬ ‫ةراجتلا‬ ‫ةيلودلا‬ ، ‫ضرتفا‬ ‫نيتلود‬ ‫نيتعلسو‬: ‫لاثم‬
‫عل‬‫ح‬ ‫ة‬ ‫ي‬ ‫ف‬ ‫م‬ ‫رؤى‬ ‫ي‬‫عر‬ ‫وت‬ ‫لم‬ ‫ع‬ ‫ت‬ ‫ل‬ ‫ل‬ ‫يرة‬ ‫س‬ ‫ب‬ ‫نها‬ ‫ك‬ ‫ول‬ ، ‫ية‬ ‫ع‬ ‫وال‬ ‫ير‬ ‫غ‬
‫ي‬‫ق‬ ‫ي‬ ‫ق‬ ‫ح‬ ‫ال‬ ‫م‬ ‫عال‬ ‫ال‬
▪ Model: a highly simplified representation of a more
complicated reality.
Economists use models to study economic issues.
▪ . ‫للغاية‬ ‫مبسط‬ ‫تمثيق‬ .‫ادية‬ ‫االقت‬ ‫القاايا‬ ‫راسة‬ ‫ل‬ ‫نماذج‬ ‫اديعن‬ ‫االقت‬ ‫م‬ ‫يستخ‬
‫النمعذج‬ :‫ا‬ ‫ف‬‫ي‬‫تعق‬ ‫أكثر‬ ‫لعالع‬
▪
use as
classroom use.
Some Familiar Models
‫عض‬ ‫ةب‬ ‫عف‬ ‫مأل‬ ‫ال‬ ‫نماذج‬ ‫ال‬
A road map
‫ق‬ ‫رري‬ ‫ال‬ ‫ة‬‫خارط‬

use as
classroom use.
A model of human
anatomy from high
school biology class
‫ئة‬ ‫ف‬ ‫من‬ ‫لري‬ ‫ب‬ ‫ال‬ ‫ح‬ ‫لري‬ ‫ت‬ ‫ال‬ ‫من‬ ‫معذج‬ ‫ن‬
‫ة‬ ‫عي‬ ‫ثان‬ ‫ال‬ ‫سة‬ ‫ر‬ ‫م‬ ‫ال‬ ‫ي‬ ‫ف‬ ‫يا‬ ‫عج‬ ‫يعل‬ ‫ب‬ ‫ال‬
use as
classroom use.
A model airplane
‫ره‬ ‫رائ‬ ‫ال‬ ‫معذج‬ ‫ن‬

use as
classroom use.
The model teeth at the
dentist’s office
‫يي‬ ‫ب‬ ‫ط‬ ‫تي‬ ‫ك‬ ‫م‬ ‫ي‬ ‫ف‬ ‫نان‬ ‫س‬ ‫األ‬ ‫معذج‬ ‫ن‬
‫نان‬ ‫س‬ ‫األ‬
Don’t forget
to floss!
use as
classroom use.
Our First Model:
The Circular-Flow Diagram

‫عل‬ ‫األ‬ ‫نا‬ ‫معذج‬ ‫ن‬ :‫ري‬ ‫ائ‬ ‫ال‬ ‫ق‬ ‫ف‬ ‫ت‬ ‫ال‬ ‫مخرط‬
▪ The Circular-Flow Diagram: a visual model of the economy,
shows how dollars flow through markets among households and
firms
▪ ‫جذومن‬ ‫يئرم‬ ‫داصتقلال‬ ، ‫نيبي‬ ‫فيك‬ ‫قفدتت‬ ‫تارلاودلا‬ ‫ربع‬
‫مخرط‬ ‫ق‬ ‫ف‬ ‫ت‬ ‫ال‬ ‫ري‬ ‫ائ‬ ‫ال‬ : ‫سر‬ ‫األ‬ ‫ين‬ ‫ب‬ ‫سعاق‬ ‫األ‬
‫ات‬ ‫لرك‬ ‫وال‬
▪ Two types of “actors”: ‫ناعون‬ ‫نم‬ ‫جلا‬ ‫له‬ ‫فام‬ ‫ال‬ ‫هات‬
▪ Households ‫رسلأا‬
▪ firms ‫تاكرشلا‬
▪ Two markets: ‫نينثا‬ ‫نم‬
:‫سعاق‬ ‫األ‬
▪ the market for goods and services ‫مات‬ ‫خ‬ ‫وال‬ ‫ع‬‫ل‬ ‫س‬ ‫ال‬ ‫سعق‬
▪ the market for “factors of production” ‫قوس‬ ‫لاومع‬ ‫جاتنلإا‬
use as
classroom use.
Factors of Production ‫لماوع‬ ‫جاتنلإا‬

▪ Factors of production: the resources the economy
uses to produce goods & services, including
▪ labor
▪ land
▪ capital )buildings & machines used in production(
▪ ‫دراوملا‬ ‫يتلا‬ ‫اهمدختسي‬ ‫داصتقلاا‬ ‫جاتنلإ‬ ‫علسلا‬ ‫تامدخلاو‬ ، :
‫تاج‬ ‫ن‬ ‫اإل‬ ‫عامق‬‫م‬
‫ك‬ ‫ذل‬ ‫ي‬ ‫ف‬ ‫ما‬ ‫ب‬
▪ ‫لامعلا‬
▪ ‫ضرلأا‬
▪ )‫ينابملا‬ ‫تلالآاو‬ ‫ةمدختسملا‬ ‫يف‬ ‫سأر(جاتنلإا‬ ‫لاملا‬
use as
classroom use.
FIGURE 1: The Circular-Flow Diagram
Households:
▪ Own the factors of production,
sell/rent them to firms for income

▪ Buy and consume goods & services
▪ :‫رسلأا‬
▪ ‫اهراجيإ‬ ‫تاكرشلل‬ ‫لخدلل‬/ ‫اهعيب‬ ‫كلمت‬ ‫لماوع‬ ‫جاتنلإا‬ ،
▪ ‫كلاهتساو‬ ‫علسلا‬ ‫اارشتامدخلاو‬
Households
Firms
Firms:
▪ Buy/hire factors of production,
use them to produce goods and services
▪ Sell goods & services
▪ :‫تاكرش‬
▪ ‫راجئتسا‬ ‫لماوع‬ ‫جاتنلإا‬ ، ‫اهمادختساو‬ ‫جاتنلإ‬ ‫علسلا‬ / ‫اارش‬
‫مات‬ ‫خ‬ ‫وال‬
▪ ‫عيب‬ ‫علسلا‬ ‫تامدخلاو‬
use as
classroom use.

FIGURE 1: The Circular-Flow Diagram
Markets for
Factors of
Production
Households Firms
Income Wages, rent,
profit
Factors of
production
Labor, land,
capital
Spending
G & S
bought
G & S
sold
Revenue
Markets for
Goods &
Services
use as

classroom use.
Our Second Model:
The Production Possibilities Frontier
‫تاج‬ ‫ن‬ ‫اإل‬ ‫يات‬ ‫كان‬ ‫إم‬ ‫ود‬ ‫ح‬
▪ The Production Possibilities Frontier )PPF(:
a graph that shows the combinations of two goods the economy
can
possibly produce given the available resources and the available
technology
▪ ‫مسر‬ ‫ينايب‬ ‫حضوي‬ ‫تافيلوت‬ ‫نيتعلس‬ ‫نكمي‬ ‫داصتقلال‬ ‫نأ‬
‫تاج‬ ‫ن‬ ‫اإل‬ ‫يات‬ ‫كان‬ ‫إم‬ ‫ود‬ ‫ح‬ : ‫معارد‬ ‫ال‬ ‫ضعا‬ ‫ي‬ ‫ف‬ ‫تجهما‬ ‫ن‬ ‫ي‬
‫تاحة‬ ‫م‬ ‫ال‬ ‫يا‬ ‫عج‬ ‫نعل‬ ‫ك‬ ‫ت‬ ‫وال‬ ‫تاحة‬ ‫م‬ ‫ال‬
▪
▪ Example:
▪ Two goods: computers and wheat
▪ One resource: labor (measured in hours)
▪ Economy has 50,000 labor hours per month available for
production.
▪ :‫لاثم‬
▪ ‫ةزهجأ‬ ‫رتويبمكلا‬ ‫حمقلاو‬: ‫ناتعلس‬

▪ )‫ساقي‬ ‫لمعلا(تاعاسلاب‬ : ‫دروم‬ ‫دحاو‬
▪ ‫ةعاس‬ ‫لمع‬ ‫ايرهش‬ ‫ةحاتملا‬ ‫جاتنلإل‬ 50،000‫داصتقلاا‬ ‫اهيدل‬
PPF Example
▪ Producing one computer requires 100 hours labor.
▪ Producing one ton of wheat requires 10 hours labor.
5,000 0
4,000 100
2,500 250
1,000 400
50,000 0
40,000 10,000
25,000 25,000
10,000 40,000
0 500 0 50,000
E
D
C
B

A
Wheat Computers Wheat Computers
Production
Employment of
labor hours
Point
on
graph
Production
Com-
puters
Wheat
A 500 0
B 400 1,000
C 250 2,500
D 100 4,000
E 0 5,000 A
B
C

D
E
PPF Example
use as
classroom use.
ACTIVE LEARNING 1
Points off the PPF
A. On the graph, find the point that represents
(100 computers, 3000 tons of wheat), label it F.
Would it be possible for the economy to produce
this combination of the two goods?
Why or why not?
B. Next, find the point that represents
(300 computers, 3500 tons of wheat), label it G.

Would it be possible for the economy to produce
this combination of the two goods?
use as
classroom use.
use as
classroom use.
ACTIVE LEARNING 1
Answers
▪ Point F:
100 computers,
3000 tons wheat
▪ Point F requires
40,000 hours

of labor.
Possible but
not efficient:
could get more
of either good
w/o sacrificing
any of the other.
F
use as
classroom use.
use as
classroom use.
ACTIVE LEARNING 1

Answers
▪ Point G:
300 computers,
3500 tons wheat
▪ Point G requires
65,000 hours
of labor.
Not possible
because
economy
only has
50,000 hours.
G
use as
classroom use.

use as
classroom use.
The PPF: What We Know So Far
Points on the PPF (like A – E)
▪ possible
▪ efficient: all resources are fully utilized
Points under the PPF (like F)
▪ possible
▪ not efficient: some resources underutilized
(e.g., workers unemployed, factories idle)
Points above the PPF (like G)
▪ not possible
use as

classroom use.
The PPF and Opportunity Cost
▪ Recall: The opportunity cost of an item is what must be given
up
to obtain that item.
▪ .‫كلذ‬ ‫ىلعرصنعلا‬ ‫يلختلا‬ ‫هنع‬ ‫لوصحلل‬ ‫بجي‬ ‫دحلأ‬ ‫رصانعلا‬ ‫يه‬ ‫ام‬
‫ير‬ ‫ذك‬ ‫ت‬ : ‫لة‬ ‫ي‬ ‫ب‬ ‫ال‬ ‫صة‬ ‫فر‬ ‫ال‬ ‫فة‬ ‫ل‬ ‫ك‬ ‫ت‬
▪ Moving along a PPF involves shifting resources )e.g., labor)
from the
production of one good to the other.
▪ ‫نم‬ ‫جاتنإ‬ ) ‫ىلع‬ ‫ليبس‬ ‫لاثملا‬ ، ‫كرحتلا(ةلامعلا‬ ‫ىلع‬ ‫لوط‬ ‫يب‬ ‫يب‬
‫معارد‬ ‫ال‬ ‫قق‬ ‫ن‬ ‫أ‬‫ل‬ ‫م‬ ‫نرعي‬ ‫ي‬ ‫اف‬
.‫دحاو‬ ‫ديج‬ ‫ىلإ‬ ‫رخلآا‬
▪ Society faces a tradeoff: Getting more of one good requires
sacrificing some of the other.
▪ .‫لوصحلا‬ ‫ىلع‬ ‫ديزملا‬ ‫نم‬ ‫ريخلا‬ ‫بلطتي‬ ‫ةيحضتلا‬ ‫ضعبب‬ ‫رخلآا‬:
‫اة‬ ‫قاي‬ ‫م‬ ‫عاجه‬ ‫ي‬ ‫ع‬‫تم‬ ‫مج‬ ‫ال‬
▪ The slope of the PPF tells you the opportunity cost of one
good in terms of
the other.
▪ .‫ردحنم‬ ‫يب‬ ‫يب‬ ‫فا‬ ‫كربخي‬ ‫ةفلكت‬ ‫ةصرف‬ ‫ةدحاو‬ ‫ةديج‬ ‫نم‬ ‫ةيحان‬
‫رى‬ ‫أخ‬

▪
use as
classroom use.
The PPF and Opportunity Cost
The slope of a line
equals the
“rise over the run,” the
amount the line rises
when you move to the
right by one unit.
‫ما‬ ‫ط‬‫خ‬ ‫يق‬ ‫م‬ ‫ساوي‬ ‫"ي‬ ‫عق‬ ‫ف‬ ‫فاع‬ ‫رت‬ ‫اال‬
، ‫وهع‬ ‫لا‬ ‫رادلم‬ ‫ذلا‬ ‫ي‬ ‫ري‬‫ت‬ ‫ف‬ ‫م‬ ‫هي‬ " ‫لا‬ ‫م‬ ‫ى‬
‫ل‬‫اا‬ ‫ن‬ ‫م‬ ‫خط‬ ‫ال‬ ‫سرة‬ ‫عا‬ ‫ب‬ ‫ين‬ ‫يم‬ ‫ال‬ ‫أ‬ ‫إل‬ ‫قال‬ ‫ت‬ ‫ن‬
.‫ةدحو‬ ‫ةدحاو‬
–1000
100
slope = = –10
Here, the opportunity

cost of a computer is
10 tons of wheat.
‫لة‬ ‫ي‬ ‫ب‬ ‫ال‬ ‫صة‬ ‫فر‬ ‫ال‬ ‫فة‬ ‫ل‬ ‫ك‬ ‫ت‬ ، ‫نا‬ ‫ه‬
‫ر‬ ‫يعت‬ ‫ب‬ ‫كم‬ ‫ل‬ ‫ل‬01 ‫قمح‬ ‫ال‬ ‫من‬ ‫ن‬‫ط‬
use as
classroom use.
ACTIVE LEARNING 2
PPF and Opportunity Cost
In which country is the opportunity cost of cloth lower?
FRANCE ENGLAND
use as

classroom use.
ACTIVE LEARNING 2
Answers
England, because its PPF is not as steep as France’s.
FRANCE ENGLAND
use as
classroom use.
Economic Growth and the PPF
With additional resources
or an improvement in
technology,
the economy can
produce more cmputers,
more wheat,
or any combination in
between.

‫ي‬ ‫ف‬ ‫ين‬ ‫س‬ ‫ح‬ ‫ت‬ ‫أو‬ ‫ية‬ ‫ضاف‬ ‫إ‬ ‫معارد‬ ‫ام‬ ‫تخ‬ ‫س‬ ‫ا‬ ‫ب‬
‫تاج‬ ‫إن‬ ‫اد‬ ‫ت‬ ‫ق‬ ‫لال‬ ‫كن‬ ‫م‬ ‫ي‬ ، ‫يا‬ ‫عج‬ ‫نعل‬ ‫ك‬ ‫ت‬ ‫ال‬
‫أو‬ ، ‫ر‬ ‫يعت‬ ‫ب‬ ‫كم‬ ‫ال‬ ‫أجهاة‬ ‫من‬ ‫ماي‬ ‫ال‬
‫ما‬ ‫نهماال‬ ‫ي‬ ‫ب‬ ‫ج‬ ‫ماي‬ ‫أي‬ ‫أو‬ ، ‫قمح‬ ‫ال‬ ‫من‬ ‫ي‬
Economic
growth shifts
the PPF
outward.
use as
classroom use.
The Shape of the PPF
▪ The PPF could be a straight line or bow-shaped
▪ Depends on what happens to opportunity cost
as economy shifts resources from one industry
to the other.
▪ ‫نكمي‬ ‫نأ‬ ‫نوكي‬ ‫يب‬ ‫يب‬ ‫فا‬ ‫طخ‬ ‫ميقتسم‬ ‫وأ‬ ‫ىلع‬ ‫لكش‬ ‫سوق‬
▪ ‫دمتعي‬ ‫ىلع‬ ‫ام‬ ‫ثدحي‬ ‫ةفلكتل‬ ‫ةصرفلا‬ ‫ةليدبلا‬ ‫امدنع‬ ‫لوحي‬
‫رى‬ ‫أخ‬ ‫أ‬ ‫إل‬ ‫نامة‬ ‫ص‬ ‫من‬ ‫معارد‬ ‫ال‬ ‫اد‬ ‫ت‬ ‫ق‬ ‫اال‬
▪ If opp. cost remains constant, PPF is a straight line.

(In the previous example, opp. cost of a computer was always
10 tons of
wheat.)
.‫ةفلكتميقتسم‬ ‫ةصرفلا‬ ‫ةتباث‬ ، ‫نإف‬ ‫يب‬ ‫يب‬ ‫فا‬ ‫يه‬ ‫طخ‬ ‫اذا‬ ‫تيقب‬
).‫نانطأ‬ ‫نم‬ ‫حمقلا‬ 10‫يف‬ ‫لاثملا‬ ‫قباسلا‬ ، ‫تناك‬ ‫ةفلكت‬ ‫ليوشت‬
) ‫ر‬ ‫يعت‬ ‫ب‬ ‫كم‬ ‫ال‬
▪ If opp. cost of a good rises as the economy produces more of
the good,
PPF is bow-shaped.
▪ ‫اذإ‬ ‫تناك‬ ‫ةفلكت‬ ‫ةصرفلا‬ ‫ةليدبلا‬ ‫ةعلسل‬ ‫ام‬ ‫عفترت‬ ‫امنيب‬
‫كعن‬ ‫ت‬ ‫اف‬ ‫ي‬ ‫ب‬ ‫ي‬ ‫ب‬ ‫إن‬ ‫ف‬ ،‫عه‬ ‫ل‬ ‫س‬ ‫من‬ ‫ثر‬ ‫اك‬ ‫تج‬ ‫ن‬ ‫ي‬ ‫اد‬ ‫ت‬ ‫ق‬ ‫اال‬
‫عس‬ ‫ل‬ ‫كق‬ ‫ش‬ ‫أ‬‫ل‬ ‫م‬
use as
classroom use.
Why the PPF Might Be Bow-Shaped
Mountain
Bikes

B
e
e
r As the economy shifts
resources
from beer to mountain bikes:
▪ PPF becomes steeper
▪ opp. cost of mountain
bikes increases
▪ ‫امنيب‬ ‫لقني‬ ‫داصتقلاا‬ ‫دراوملا‬ ‫نم‬
:‫ةريبلا‬ ‫ىلإ‬ ‫تاجاردلا‬ ‫ةيلبجلا‬
▪ ‫يب‬ ‫يب‬ ‫فا‬ ‫حبصت‬ ‫رثكأ‬ ‫ةدح‬
▪ ‫ةفلكت‬ ‫تاجاردلا‬ ‫ةيلبجلا‬ ‫ديزي‬. ‫لباقم‬
use as
classroom use.
At point A,

most workers are
producing beer,
even those who
are better suited
to building bikes.
So, do not have to
give up much beer
to get more bikes.
‫تجعن‬ ‫ن‬ ‫ي‬ ‫عمال‬ ‫ال‬ ‫عظم‬ ‫م‬ ، ‫اي‬ ‫قرة‬ ‫ن‬ ‫ال‬ ‫ي‬ ‫ف‬
‫ال‬ ‫ئك‬ ‫أول‬ ‫أ‬‫ت‬ ‫ح‬ ، ‫يرة‬ ‫ب‬ ‫ال‬ ‫مالامة‬ ‫ثر‬ ‫أك‬ ‫هم‬ ‫ن‬ ‫ذي‬
.‫اانبل‬ ‫تاجاردلا‬
‫ير‬ ‫ث‬ ‫ك‬ ‫ال‬ ‫ن‬‫م‬ ‫ي‬‫ل‬ ‫تخ‬ ‫ال‬ ‫أ‬ ‫إل‬ ‫ارر‬ ‫ت‬ ‫ال‬ ، ‫ك‬ ‫ذل‬ ‫ل‬
‫من‬ ‫ماي‬ ‫ال‬ ‫أ‬‫ل‬ ‫م‬ ‫عل‬ ‫لح‬ ‫ل‬ ‫يرة‬ ‫ب‬ ‫ال‬ ‫من‬
.‫تاجاردلا‬
A
Mountain
Bikes
B
e

e
r At A, opp. cost of
mtn bikes is low.
use as
classroom use.
At B, most workers are
producing bikes.
The few left in beer are the
best brewers.
Producing more bikes would
require shifting some of the
best brewers away from beer
production,
causing a big drop in beer

output.
. ‫يف‬ ‫يب‬ ، ‫مظعم‬ ‫لامعلا‬ ‫نوجتني‬ ‫ات‬ ‫راج‬ ‫ال‬
‫ع‬ ‫ان‬ ‫م‬ ‫اق‬ ‫أف‬ ‫هي‬ ‫يرة‬ ‫ب‬ ‫ال‬ ‫ي‬ ‫ف‬ ‫ية‬ ‫ق‬ ‫ب‬ ‫ت‬ ‫م‬ ‫ال‬ ‫لة‬ ‫ي‬ ‫ل‬ ‫ق‬ ‫ال‬
.‫ةريبلا‬
‫عض‬ ‫ب‬ ‫قق‬ ‫ن‬ ‫ات‬ ‫راج‬ ‫ال‬ ‫من‬ ‫ماي‬ ‫ال‬ ‫تاج‬ ‫إن‬ ‫لي‬ ‫تر‬ ‫ي‬
‫البيرة‬ ‫إنتاج‬ ‫من‬ ‫ف‬‫ا‬ ‫بعي‬ ‫البيرة‬ ‫انع‬ ‫م‬ ‫أفاق‬ ،
‫تاج‬ ‫إن‬ ‫ي‬ ‫ف‬ ‫ير‬ ‫ب‬ ‫ك‬ ‫فاض‬ ‫خ‬ ‫ان‬ ‫ي‬ ‫ف‬ ‫بي‬ ‫س‬ ‫ت‬ ‫ي‬ ‫مما‬
.‫ةريبلا‬
B
Mountain
Bikes
B
e
e
r
At B, opp. cost
of mtn bikes
is high.
use as
classroom use.

▪ So, PPF is bow-shaped when different workers have different
skills,
different opportunity costs of producing one good in terms of
the
other.
▪ ‫اذل‬ ، ‫يب‬ ‫يب‬ ‫فا‬ ‫يه‬ ‫ىلع‬ ‫لكش‬ ‫سوقلا‬ ‫امدنع‬ ‫نوكي‬ ‫دل‬ ‫ين‬ ‫ل‬ ‫عام‬ ‫ال‬ ‫ى‬
، ‫فة‬ ‫ل‬ ‫ت‬ ‫مخ‬ ‫مهارات‬ ‫ين‬ ‫ف‬ ‫ل‬ ‫ت‬ ‫مخ‬ ‫ال‬
.‫فيلاكت‬ ‫ةصرف‬ ‫ةفلتخم‬ ‫جاتنلإ‬ ‫ةعلس‬ ‫ةدحاو‬ ‫نم‬ ‫ةيحان‬ ‫ىرخأ‬
▪ The PPF would also be bow-shaped when there is some other
resource, or mix of resources with varying opportunity costs
(E.g., different types of land suited for
different uses).
‫عض‬ ‫ب‬ ‫عد‬ ‫وج‬ ‫ن‬ ‫م‬ ‫عس‬ ‫ل‬ ‫كق‬ ‫ش‬ ‫أ‬‫ل‬ ‫م‬ ‫ي‬ ‫ب‬ ‫ي‬ ‫ب‬ ‫ي‬ ‫ب‬ ‫راز‬‫ط‬ ‫كعن‬ ‫ي‬ ‫س‬ ‫ما‬ ‫ك‬
‫معارد‬ ‫ال‬ ‫من‬ ‫ج‬ ‫ماي‬ ‫أو‬ ، ‫خرى‬ ‫األ‬ ‫معارد‬ ‫ال‬
‫ة‬ ‫فاوت‬ ‫ت‬ ‫م‬ ‫ال‬ ‫لة‬ ‫ي‬ ‫ب‬ ‫ال‬ ‫صة‬ ‫فر‬ ‫ال‬ ‫يف‬ ‫كال‬ ‫ت‬ ‫ب‬
).‫ىلع‬ ‫ليبس‬ ‫لاثملا‬ ، ‫عاونأ‬ ‫ةفلتخم‬ ‫نم‬ ‫يضارلأا‬ ‫ةبسانم‬
)‫فة‬ ‫ل‬ ‫ت‬ ‫مخ‬ ‫ال‬ ‫امات‬ ‫تخ‬ ‫س‬ ‫لال‬
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classroom use.
The PPF: A Summary
▪ The PPF shows all combinations of two goods that an
economy can
possibly produce, given its resources and technology.
‫كن‬ ‫م‬ ‫ي‬ ‫ين‬ ‫ت‬ ‫ع‬ ‫ل‬ ‫س‬ ‫من‬ ‫ج‬ ‫ماي‬ ‫ق‬ ‫ك‬ ‫أف‬ ‫ي‬ ‫ب‬ ‫ي‬ ‫ب‬ ‫ضح‬ ‫ع‬ ‫تهعي‬ ‫ي‬ ‫لعج‬ ‫ن‬ ‫ك‬ ‫وت‬
‫معارده‬ ‫ل‬ ‫ظرا‬ ‫ن‬ ، ‫تجهما‬ ‫ن‬ ‫ي‬ ‫أن‬ ‫اد‬ ‫ت‬ ‫ق‬ ‫لال‬
▪ The PPF illustrates the concepts of tradeoff and opportunity
cost,
efficiency and inefficiency, unemployment, and economic
growth.
▪ .‫حضوي‬ ‫يب‬ ‫يب‬ ‫فا‬ ‫ميهافم‬ ‫ةضياقملا‬ ‫ةفلكتو‬ ‫صرفلا‬ ، ‫ةاافكلاو‬
، ‫مع‬ ‫م‬ ‫لا‬ ‫ك‬ ‫ةااف‬ ، ‫لاو‬ ‫ب‬ ‫ةلاط‬ ، ‫لاو‬ ‫ن‬ ‫وم‬ ‫لاا‬ ‫ق‬ ‫ت‬ ‫ص‬ ‫ا‬ ‫ي‬
▪ A bow-shaped PPF illustrates the concept of increasing
opportunity
cost.
▪ .‫حضوي‬ ‫لكشلا‬ ‫يب‬ ‫يب‬ ‫فا‬ ‫موهفم‬ ‫ةدايز‬ ‫ةفلكت‬ ‫ةصرفلا‬ ‫ةليدبلا‬
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classroom use.
Microeconomics and Macroeconomics‫مهم‬
▪ Microeconomics is the study of how households and
firms make decisions and how they interact in markets.
▪ ‫اقاوسلأا‬ ‫سر‬ ‫األ‬ ‫خاذ‬ ‫ات‬ ‫ية‬ ‫ف‬ ‫ي‬ ‫ك‬ ‫سة‬ ‫درا‬ ‫هع‬ ‫ي‬ ‫جائ‬ ‫ال‬ ‫اد‬ ‫ت‬ ‫ق‬ ‫ال‬
‫ي‬ ‫ف‬ ‫لها‬ ‫فام‬ ‫ت‬ ‫ية‬ ‫ف‬ ‫ي‬ ‫وك‬ ‫قرارات‬ ‫ال‬ ‫تخاذ‬ ‫ال‬ ‫ات‬ ‫لرك‬ ‫وال‬
▪ Macroeconomics is the study of economy-wide
phenomena, including inflation, unemployment, and
economic growth.
▪ .‫داصتقلاا‬ ‫يلكلا‬ ‫وه‬ ‫ةسارد‬ ‫رهاوظلا‬ ‫ةيداصتقلاا‬ ‫لا‬ ‫ي‬ ‫ف‬ ‫ما‬ ‫ب‬ ، ‫لة‬ ‫شام‬
‫ادي‬ ‫ت‬ ‫ق‬ ‫اال‬ ‫نمع‬ ‫وال‬ ‫ة‬ ‫برال‬ ‫وال‬ ‫اخم‬ ‫ت‬ ‫ال‬ ‫ك‬ ‫ذل‬
▪ These two branches of economics are closely intertwined, yet
distinct—they address different questions.
▪ ‫ناذه‬ ‫ناعرفلا‬ ‫نم‬ ‫عورف‬ ‫داصتقلاا‬ ‫ناطبارتم‬ ‫لكشب‬ ‫قيثو‬ ، ‫عمو‬
‫فة‬ ‫ل‬ ‫ت‬ ‫مخ‬ ‫ت‬ ‫ائ‬ ‫خ‬ ‫ب‬ ‫ياان‬ ‫تم‬ ‫ي‬ ‫ك‬ ‫ذل‬
▪
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classroom use.
The Economist as Policy Advisor ‫ر‬ ‫يداصتقلاا‬ ‫اشتسمك‬
‫سه‬ ‫يا‬ ‫س‬ ‫ال‬
▪ As scientists, economists make
positive statements, which attempt to describe the world as it is.
▪ As policy advisors, economists make
▪ ‫مهفصوب‬ ‫نيراشتسم‬ ‫تاسايسلل‬ . ‫كو‬ ‫عن‬ ‫ادي‬ ‫ت‬ ‫ق‬ ‫اال‬ ‫ي‬ ‫ل‬ ‫ي‬ ، ‫لماا‬ ‫م‬
‫هع‬ ‫ما‬ ‫ك‬ ‫م‬ ‫عال‬ ‫ال‬ ‫ف‬ ‫ت‬ ‫أن‬ ‫حاول‬ ‫ت‬ ‫ية‬ ‫جاب‬ ‫إي‬ ‫حات‬ ‫ري‬ ‫ت‬ ‫ب‬
، ‫نإف‬ ‫لاا‬ ‫ق‬ ‫ت‬ ‫ص‬ ‫ا‬ ‫ي‬ ‫ي‬ ‫ن‬ ‫ي‬‫عل‬ ‫نعم‬ ‫ذب‬‫ل‬ ‫ك‬
normative statements,
which attempt to prescribe how the world should be.
▪ Positive statements can be confirmed or refuted, normative
statements cannot.
▪ .‫تانايبلا‬ ‫ةيرايعملا‬ ، ‫يتلا‬ ‫لواحت‬ ‫فصو‬ ‫فيك‬ ‫بجي‬ ‫نأ‬ ‫نوكي‬
‫م‬ ‫عال‬ ‫ال‬
▪ ‫نكمي‬ ‫ديكأت‬ ‫وأ‬ ‫ضحد‬ ‫تانايبلا‬ ‫ةيباجيلإا‬ ، ‫لاو‬ ‫نكمي‬ ‫تانايبلل‬
‫ة‬ ‫ياري‬ ‫ع‬ ‫م‬ ‫ال‬
▪ Govt employs many economists for policy advice. E.g., the
U.S. President has
a Council of Economic Advisors, which the author of this
textbook chaired from
2003 to 2005.

use as
classroom use.
ACTIVE LEARNING 3
Identifying positive vs. normative
‫ية‬ ‫يجاب‬ ‫اإل‬ ‫د‬ ‫ةح‬ ‫ياري‬ ‫ع‬ ‫م‬ ‫ال‬ ‫ق‬ ‫قاب‬ ‫م‬
Which of these statements are “positive” and which are
“normative”?
How can you tell the difference?
‫هذه‬ ‫من‬ ‫ية"أي‬ ‫جاب‬ ‫إي‬ " ‫ها‬ ‫ة"وأي‬ ‫ياري‬ ‫ع‬ ‫فرق"م‬ ‫ال‬ ‫ة‬ ‫عرف‬ ‫م‬ ‫نك‬ ‫ك‬ ‫م‬ ‫ي‬ ‫يف‬ ‫ك‬ ‫؟؟‬
‫بارات‬ ‫ع‬ ‫ال‬
A Prices rise when the government increases the quantity of
money.
a. .‫عفترت‬ ‫راعسلأا‬ ‫امدنع‬ ‫ديزت‬ ‫ةموكحلا‬ ‫نم‬ ‫ةيمك‬ ‫لاملا‬
B The government should print less money.
b. ‫بجيلقأ‬ ‫ىلع‬ ‫ةموكحلا‬ ‫ةعابط‬ ‫لاومأ‬
C A tax cut is needed to stimulate the economy.
c. .‫كانه‬ ‫ةجاح‬ ‫ىلإ‬ ‫ضفخ‬ ‫بئارضلا‬ ‫زيفحتل‬ ‫داصتقلاا‬
d. An increase in the price of burritos will cause an increase in

consumer
demand for music downloads. ‫ا‬ ‫تعس‬ ‫عري‬ ‫ب‬ ‫عر‬ ‫س‬ ‫ي‬ ‫ف‬ ‫ادة‬ ‫اي‬ ‫ل‬
‫ي‬‫ك‬ ‫تهال‬ ‫س‬ ‫اال‬ ‫لي‬ ‫ر‬ ‫ال‬ ‫ي‬ ‫ف‬ ‫ادة‬ ‫زي‬ ‫أ‬ ‫إل‬ ‫يؤدي‬ ‫س‬
.‫ىلع‬ ‫تلايزنت‬ ‫ىقيسوملا‬
use as
classroom use.
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classroom use.
ACTIVE LEARNING 3
Answers
a. Prices rise when the government increases the
quantity of money.
Positive – describes a relationship, could use data to confirm or
refute.

.‫فصيضحدلا‬ ‫ةقلاعلا‬ ، ‫نكمي‬ ‫نأ‬ ‫مدختسي‬ ‫تانايبلا‬ ‫ديكأتلل‬ ‫وأ‬ -
‫ي‬ ‫جاب‬ ‫إي‬
b. The government should print less money.
Normative – this is a value judgment, cannot be confirmed or
refuted. ‫وأضحدلا‬ ‫نكمي‬ ‫ديكأتلا‬ ‫اذهو‬ ‫ه‬ ‫ال‬ ، ‫يمة‬ ‫ق‬ ‫ال‬ ‫كم‬ ‫ح‬ ‫و‬-
‫ة‬ ‫ياري‬ ‫ع‬ ‫م‬ ‫ال‬
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classroom use.
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ACTIVE LEARNING 3
Answers
c. A tax cut is needed to stimulate the economy.

Normative – another value judgment. ‫مكح‬ ‫هميق‬ ‫ىرخأ‬
d. An increase in the price of burritos will cause an
increase in consumer demand for music
downloads.
Positive – describes a relationship.
Note that a statement need not be true to be positive.
. ‫العالقة‬ ‫ف‬ ‫ي‬ .‫ا‬‫ف‬‫ي‬‫إيجاب‬ ‫ليكعن‬ ‫حا‬‫ف‬‫ي‬‫صح‬ ‫البيان‬ ‫يكعن‬ ‫أن‬ ‫يجي‬ ‫ال‬ ‫أنه‬ ‫الحل‬-
‫ي‬ ‫يجاب‬ ‫اإل‬
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Why Economists Disagree

▪ Economists often give conflicting policy advice.
▪ They sometimes disagree about the validity of alternative
positive
theories about the world.
▪ They may have different values and, therefore, different
normative
views about what policy should try to accomplish.
▪ Yet, there are many propositions about which most economists
agree.
▪ .‫متااربة‬ ‫سياسية‬ ‫ائح‬ ‫ن‬ ‫اديعن‬ ‫االقت‬ ‫م‬ ‫يق‬ ‫ما‬ ‫ف‬‫ا‬‫غالب‬
▪ .‫يف‬ ‫ضعب‬ ‫نايحلأا‬ ‫نوفلتخي‬ ‫لوح‬ ‫ةحص‬ ‫تايرظنلا‬ ‫ةيباجيلإا‬
‫م‬ ‫عال‬ ‫ال‬ ‫عل‬‫ح‬ ‫لة‬ ‫ي‬ ‫ب‬ ‫ال‬
▪ ‫دق‬ ‫ة‬ ‫ياري‬ ‫ع‬ ‫م‬ ‫ظر‬ ‫ن‬ ‫وجهات‬ ، ‫ي‬ ‫تال‬ ‫ال‬ ‫وب‬ ، ‫فة‬ ‫ل‬ ‫ت‬ ‫مخ‬ ‫يم‬ ‫ل‬ ‫هم‬ ‫ي‬ ‫ل‬ ‫كعن‬ ‫ي‬
‫حاول‬ ‫ت‬ ‫أن‬ ‫جي‬ ‫ي‬ ‫ما‬ ‫عل‬‫ح‬ ‫فة‬ ‫ل‬ ‫ت‬ ‫مخ‬
.‫ةسايسلا‬ ‫هقيقحت‬
▪ ‫عمو‬ ‫كلذ‬ ، ‫كانه‬ ‫ديدعلا‬ ‫نم‬ ‫تاحرتقملا‬ ‫يتلا‬ ‫قفتي‬ ‫اهيلع‬ ‫مظعم‬
‫ين‬ ‫ادي‬ ‫ت‬ ‫ق‬ ‫اال‬
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classroom use.

Propositions about Which Most
Economists Agree (and % who agree)
▪ A ceiling on rents reduces the quantity and quality
of housing available. (93%)
▪ Tariffs and import quotas usually reduce general
economic welfare. (93%)
▪ The United States should not restrict employers
from outsourcing work to foreign countries. (90%)
▪ The United States should eliminate agriculture
subsidies. (85%)
continued…
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Propositions about Which Most
Economists Agree (and % agreeing)

▪ The gap between Social Security funds and
expenditures will become unsustainably large
within the next fifty years if current policies remain
unchanged. (85%)
▪ A large federal budget deficit has an adverse effect
on the economy. (83%)
▪ A minimum wage increases unemployment among
young and unskilled workers. (79%)
▪ Effluent taxes and marketable pollution permits
represent a better approach to pollution control
than imposition of pollution ceilings. (78%)
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classroom use.
FYI: Who Studies Economics?
▪ Ronald Reagan, President of the United States
▪ Barbara Boxer, U.S. Senator

▪ Sandra Day-O’Connor, Former Supreme Court Justice
▪ Anthony Zinni, Former General, U.S. Marine Corps
▪ Kofi Annan, Former Secretary General, United Nations
▪ Meg Witman, Chief Executive Officer, eBay
▪ Steve Ballmer, Chief Executive Officer, Microsoft
▪ Arnold Schwarzenegger, Former Gov. of California, Actor
▪ Ben Stein, Political Speechwriter, Actor, Game Show Host
▪ Mick Jagger, Singer for the Rolling Stones
▪ John Elway, NFL Quarterback
▪ Tiger Woods, Golfer
▪ Diane von Furstenburg, Fashion Designer
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SUMMARY

• As scientists, economists try to explain the world using
models with
appropriate assumptions.
• ‫ااملعكةبسانم‬ ، ‫لواحي‬ ‫نويداصتقلاا‬ ‫حرش‬ ‫ملاعلا‬ ‫مادختساب‬ ‫جذامن‬
‫ضات‬ ‫ترا‬ ‫اف‬ ‫ع‬ ‫م‬
• Two simple models are the Circular-Flow Diagram and the
Production Possibilities Frontier.
• ‫ناجذومنجاتنلإا‬ ‫ناطيسب‬ ‫امه‬ ‫ططخم‬ ‫قفدتلا‬ ‫يرئادلا‬ ‫دودحو‬
• Microeconomics studies the behavior of consumers and firms,
and their
interactions in markets. Macroeconomics studies the economy
as a whole.
• ‫داصتقلاا‬ ‫يلكلا‬ ‫سردي‬ . ‫سردي‬ ‫داصتقلاا‬ ‫يئزجلا‬ ‫كولس‬
‫ق‬‫سعا‬ ‫األ‬ ‫ي‬ ‫ف‬ ‫تهم‬ ‫فامال‬ ‫وت‬ ‫ات‬ ‫لرك‬ ‫وال‬ ‫ين‬ ‫ك‬ ‫ل‬ ‫ته‬ ‫س‬ ‫م‬ ‫ال‬
.‫داصتقلاا‬ ‫لكك‬
• As policy advisers, economists offer advice on how to improve
the
world. ‫نيراشتسمك‬ ‫ةسايسلل‬ ، ‫عل‬‫ح‬ ‫لعرة‬ ‫م‬ ‫ال‬ ‫عن‬ ‫ادي‬ ‫ت‬ ‫ق‬ ‫اال‬ ‫م‬ ‫ق‬ ‫ي‬
.‫م‬ ‫عال‬ ‫ال‬ ‫ين‬ ‫س‬ ‫ح‬ ‫ت‬ ‫ية‬ ‫ف‬ ‫ي‬ ‫ك‬
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classroom use.
1
Ten Principles of
Economics Premium
PowerPoint
Slides by
Ron Cronovich
use as
classroom use.
N. Gregory Mankiw
Macroeconomics
Principles of
Sixth Edition
use as

classroom use.
In this chapter,
• Why do people—and nations—choose to be
economically interdependent?
• How can trade make everyone better off?
• What is absolute advantage?
What is comparative advantage?
How are these concepts similar?
How are they different?
Interdependence ‫طبارتلا‬
Every day you rely on
many people from around
the world, most of whom
you’ve never met, to provide
you with the goods
and services you enjoy.

‫ا‬ ‫من‬ ‫ي‬ ‫ع‬ ‫ال‬ ‫أ‬‫ل‬ ‫م‬ ‫تم‬ ‫ع‬ ‫ت‬ ‫عم‬ ‫ي‬ ‫ق‬ ‫ك‬ ‫لخاص‬ ‫أل‬
‫م‬ ‫ل‬ ‫عظمهم‬ ‫وم‬ ، ‫م‬ ‫عال‬ ‫ال‬ ‫حاا‬ ‫أن‬ ‫ع‬ ‫ي‬ ‫جم‬ ‫من‬
‫بالسلع‬ ‫ك‬ ‫لتاوي‬ ، ‫قا‬‫ف‬‫ل‬‫مر‬ ‫بهم‬ ‫تلتق‬
.‫تامدخلاو‬ ‫يتلا‬ ‫عتمتست‬ ‫اهب‬
coffee from
Kenya
dress shirt
from China
cell phone
from Taiwan
hair gel from
Cleveland, OH
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classroom use.
Interdependence
▪ One of the Ten Principles from Chapter 1:
Trade can make everyone better off.

▪ We now learn why people—and nations—
choose to be interdependent,
and how they can gain from trade.
Our Example
▪ Two countries: the U.S. and Japan
▪ Two goods: computers and wheat
▪ One resource: labor, measured in hours
▪ We will look at how much of both goods
each country produces and consumes
▪ if the country chooses to be self-sufficient
▪ if it trades with the other country
– :‫ان‬ ‫ياب‬ ‫وال‬ ‫ة‬ ‫تح‬ ‫م‬ ‫ال‬ ‫يات‬ ‫عال‬ ‫ال‬ ‫تان‬ ‫دول‬
– ‫تان‬ ‫ع‬ ‫ل‬ ‫س‬ :‫قمح‬ ‫وال‬ ‫ر‬ ‫يعت‬ ‫ب‬ ‫كم‬ ‫ال‬ ‫أجهاة‬
– ‫واح‬ ‫معرد‬ :‫سامات‬ ‫ي‬ ‫ف‬ ‫قاس‬ ‫ي‬ ، ‫عمق‬ ‫ال‬
– ‫ق‬ ‫ك‬ ‫كها‬ ‫ل‬ ‫ته‬ ‫س‬ ‫وت‬ ‫تجها‬ ‫ن‬ ‫ت‬ ‫ي‬‫ت‬ ‫ال‬ ‫ع‬ ‫اائ‬ ‫ب‬ ‫ال‬ ‫ية‬ ‫م‬ ‫ك‬ ‫أ‬ ‫إل‬ ‫نظر‬ ‫ن‬ ‫سعف‬
‫ة‬ ‫دول‬
– ‫يا‬ ‫ذات‬ ‫ي‬‫ف‬ ‫ت‬ ‫ك‬ ‫م‬ ‫كعن‬ ‫ي‬ ‫أن‬ ‫ل‬ ‫ب‬ ‫ال‬ ‫تار‬ ‫اخ‬ ‫إذا‬
– ‫خر‬ ‫اآل‬ ‫ل‬ ‫ب‬ ‫ال‬ ‫ع‬ ‫م‬ ‫ر‬‫تاج‬ ‫ي‬ ‫ان‬ ‫ك‬ ‫إذا‬

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Production Possibilities in the U.S.
‫ة‬ ‫تح‬ ‫م‬ ‫ال‬ ‫يات‬ ‫عال‬ ‫ال‬ ‫ي‬ ‫ف‬ ‫تاج‬ ‫ن‬ ‫اإل‬ ‫ات‬ ‫كان‬ ‫إم‬
▪ The U.S. has 50,000 hours of labor
available for production, per month.
▪ Producing one computer
requires 100 hours of labor.
▪ Producing one ton of wheat
requires 10 hours of labor.
▪ .‫ةعاس‬ ‫لمع‬ ‫ةحاتم‬ ‫جاتنلإل‬ ، ‫يف‬ ‫رهشلا‬ 50،000‫ىدل‬ ‫تايلاولا‬
‫ة‬ ‫تح‬ ‫م‬ ‫ال‬

▪ .‫ةعاس‬ ‫نم‬ ‫لمعلا‬ 100‫بلطتي‬ ‫جاتنإ‬ ‫زاهج‬ ‫رتويبمك‬ ‫دحاو‬
▪ .‫تاعاس‬ ‫نم‬ ‫لمعلا‬ 10‫بلطتي‬ ‫جاتنإ‬ ‫نط‬ ‫دحاو‬ ‫نم‬ ‫حمقلا‬
4,000
100
5,000
2,000
1,000
3,000
500 200 300 400
0
Computers
Wheat
(tons)
The U.S. PPF
The U.S. has enough labor to produce
500 computers,
or 5000 tons of wheat,
or any combination along the PPF.
‫تاج‬ ‫ن‬ ‫إل‬ ‫ة‬ ‫عمال‬ ‫ال‬ ‫من‬ ‫ي‬‫ف‬ ‫ك‬ ‫ي‬ ‫ما‬ ‫ة‬ ‫تح‬ ‫م‬ ‫ال‬ ‫يات‬ ‫عال‬ ‫ال‬ ‫ى‬ ‫ل‬
005 ‫ر‬ ‫يعت‬ ‫ب‬ ‫م‬ ‫ك‬ ‫جهاز‬
‫أو‬0005 ‫قمح‬ ‫ال‬ ‫من‬ ‫ن‬‫ط‬

‫م‬ ‫أي‬ ‫فأو‬‫ا‬ ‫ي‬ ‫ب‬ ‫ي‬ ‫ب‬ ‫عل‬‫ط‬ ‫أ‬‫ل‬ ‫م‬ ‫جمعمة‬
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4,000
100
5,000
2,000
1,000
3,000
500 200 300 400
0
Computers
Wheat
(tons)

The U.S. Without Trade
Suppose the U.S. uses half its labor to produce
each of the two goods.
Then it will produce and consume
250 computers and
2500 tons of wheat.
.‫ضرتفنل‬ ‫نأ‬ ‫تايلاولا‬ ‫ةدحتملا‬ ‫مدختست‬ ‫فصن‬ ‫اهلامعأ‬ ‫جاتنلإ‬ ‫لك‬
‫ين‬ ‫ت‬ ‫ع‬ ‫ل‬ ‫س‬
‫لك‬ ‫ته‬ ‫س‬ ‫وت‬ ‫تج‬ ‫ن‬ ‫ت‬ ‫س‬ ‫م‬ ‫ج‬052 ‫و‬ ‫ر‬ ‫يعت‬ ‫ب‬ ‫م‬ ‫ك‬ ‫هاز‬ ‫ج‬0052 ‫قمح‬ ‫ال‬ ‫من‬ ‫ن‬‫ط‬
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ACTIVE LEARNING 1

Derive Japan’s PPF
Use the following information to draw Japan’s
PPF.
▪ Japan has 30,000 hours of labor available for
production, per month.
▪ Producing one computer requires 125 hours of
labor.
▪ Producing one ton of wheat requires 25 hours
of labor.
Your graph should measure computers on the
horizontal axis.
use as
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Computers
Wheat
(tons)

2,000
1,000
200
0
100 300
Japan’s PPF
Japan has enough labor to produce
240 computers,
or 1200 tons of wheat,
or any combination along the
PPF.
‫جها‬ ‫تاج‬ ‫ن‬ ‫إل‬ ‫ة‬ ‫عمال‬ ‫ال‬ ‫من‬ ‫ي‬‫ف‬ ‫ك‬ ‫ي‬ ‫ما‬ ‫ها‬ ‫ي‬ ‫ل‬ ‫ان‬ ‫ياب‬ ‫ال‬042 ‫ر‬ ‫يعت‬ ‫ب‬ ‫م‬ ‫ك‬ ‫ز‬
،
‫أو‬0021 ‫ي‬ ‫ب‬ ‫ي‬ ‫ب‬ ‫عل‬‫ط‬ ‫أ‬‫ل‬ ‫م‬ ‫ج‬ ‫ماي‬ ‫أي‬ ‫أو‬ ‫قمح‬ ‫ال‬ ‫من‬ ‫ن‬‫ط‬
.‫فا‬
use as
classroom use.
Japan Without Trade
Computers

Wheat
(tons)
2,000
1,000
200
0
100 300
Suppose Japan uses half its labor to produce each
good.
Then it will produce and consume120 computers
and 600 tons of wheat.
‫تاج‬ ‫ن‬ ‫إل‬ ‫ها‬ ‫مال‬‫أم‬ ‫ف‬ ‫ن‬ ‫م‬ ‫تخ‬ ‫س‬ ‫ت‬ ‫ان‬ ‫ياب‬ ‫ال‬ ‫أن‬ ‫ترض‬ ‫ف‬ ‫ن‬ ‫ل‬ . ‫تج‬ ‫ن‬ ‫ت‬ ‫س‬ ‫م‬ ‫ج‬
‫عة‬ ‫ل‬ ‫س‬ ‫ق‬ ‫ك‬
‫لك‬ ‫ته‬ ‫س‬ ‫وت‬021 ‫و‬ ‫ر‬ ‫يعت‬ ‫ب‬ ‫م‬ ‫ك‬ ‫هاز‬ ‫ج‬006 ‫قمح‬ ‫ال‬ ‫من‬ ‫ن‬‫ط‬
use as
classroom use.

use as
classroom use.
Consumption With and Without Trade
▪ Without trade,
▪ U.S. consumers get 250 computers
and 2500 tons wheat.
▪ Japanese consumers get 120 computers
and 600 tons wheat.
▪ We will compare consumption without trade to consumption
with trade.
▪ First, we need to see how much of each good is produced and
traded by the
two countries.
▪ ‫نودب‬ ‫ةراجتلا‬ ،
▪ . ‫القمح‬ ‫من‬ ‫ا‬‫ف‬‫ن‬‫ط‬2500‫زاهج‬ ‫رتويبمك‬ ‫و‬ 250‫لصي‬ ‫وكلهتسم‬ ‫تايلاولا‬
‫أ‬ ‫إل‬ ‫ة‬ ‫تح‬ ‫م‬ ‫ال‬
▪ .‫نط‬ ‫حمق‬ 600‫زاهج‬ ‫رتويبمك‬ ‫و‬ 120‫لصحي‬ ‫نوكلهتسملا‬

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