SlideShare a Scribd company logo
1 of 30
PowerPoint® Lecture Presentation
to accompany
Principles of Economics, Third Edition
N. Gregory Mankiw
Prepared by Mark P. Karscig, Central Missouri State University.
1
INTRODUCTION
Copyright © 2004 South-Western/Thomson Learning
11Ten Principles of
Economics
Copyright © 2004 South-Western/Thomson Learning
Economy. . .
. . . The word economy comes from a Greek
word for “one who manages a household.”
Copyright © 2004 South-Western/Thomson Learning
TEN PRINCIPLES OF
ECONOMICS
• A household and an economy
face many decisions:
• Who will work?
• What goods and how many of them should be
produced?
• What resources should be used in production?
• At what price should the goods be sold?
Copyright © 2004 South-Western/Thomson Learning
TEN PRINCIPLES OF
ECONOMICS
Society and Scarce Resources:
• The management of society’s resources is
important because resources are scarce.
• Scarcity. . . means that society has limited resources
and therefore cannot produce all the goods and
services people wish to have.
Copyright © 2004 South-Western/Thomson Learning
TEN PRINCIPLES OF
ECONOMICS
Economics is the study of how society manages
its scarce resources.
Copyright © 2004 South-Western/Thomson Learning
TEN PRINCIPLES OF
ECONOMICS
• How people make decisions.
• People face tradeoffs.
• The cost of something is what you give up to get it.
• Rational people think at the margin.
• People respond to incentives.
Copyright © 2004 South-Western/Thomson Learning
TEN PRINCIPLES OF
ECONOMICS
• How people interact with each other.
• Trade can make everyone better off.
• Markets are usually a good way to organize
economic activity.
• Governments can sometimes improve economic
outcomes.
Copyright © 2004 South-Western/Thomson Learning
TEN PRINCIPLES OF
ECONOMICS
• The forces and trends that affect how the
economy as a whole works.
• The standard of living depends on a country’s
production.
• Prices rise when the government prints too much
money.
• Society faces a short-run tradeoff between inflation
and unemployment.
Copyright © 2004 South-Western/Thomson Learning
Principle #1: People Face Tradeoffs.
“There is no such thing as a free lunch!”
Copyright © 2004 South-Western/Thomson Learning
Making decisions requires trading
off one goal against another.
Principle #1: People Face Tradeoffs.
To get one thing, we usually have to give up
another thing.
• Guns v. butter
• Food v. clothing
• Leisure time v. work
• Efficiency v. equity
Copyright © 2004 South-Western/Thomson Learning
Principle #1: People Face Tradeoffs
• Efficiency v. Equity
• Efficiency means society gets the most that it can
from its scarce resources.
• Equity means the benefits of those resources are
distributed fairly among the members of society.
Copyright © 2004 South-Western/Thomson Learning
Principle #2: The Cost of Something Is What
You Give Up to Get It.
• Decisions require comparing costs and benefits
of alternatives.
• Whether to go to college or to work?
• Whether to study or go out on a date?
• Whether to go to class or sleep in?
• The opportunity cost of an item is what you
give up to obtain that item.
Copyright © 2004 South-Western/Thomson Learning
Principle #2: The Cost of Something Is What
You Give Up to Get It.
LA Laker basketball star
Kobe Bryant chose to
skip college and go
straight from high
school to the pros where
he has earned millions
of dollars.
Copyright © 2004 South-Western/Thomson Learning
People make decisions by comparing
costs and benefits at the margin.
Principle #3: Rational People Think at the
Margin.
• Marginal changes are small, incremental
adjustments to an existing plan of action.
Copyright © 2004 South-Western/Thomson Learning
Principle #4: People Respond to Incentives.
• Marginal changes in costs or benefits motivate
people to respond.
• The decision to choose one alternative over
another occurs when that alternative’s marginal
benefits exceed its marginal costs!
Copyright © 2004 South-Western/Thomson Learning
Principle #5: Trade Can Make Everyone
Better Off.
• People gain from their ability to trade with one
another.
• Competition results in gains from trading.
• Trade allows people to specialize in what they
do best.
Copyright © 2004 South-Western/Thomson Learning
Principle #6: Markets Are Usually a Good
Way to Organize Economic Activity.
• A market economy is an economy that allocates
resources through the decentralized decisions of
many firms and households as they interact in
markets for goods and services.
• Households decide what to buy and who to work
for.
• Firms decide who to hire and what to produce.
Copyright © 2004 South-Western/Thomson Learning
Principle #6: Markets Are Usually a Good
Way to Organize Economic Activity.
• Adam Smith made the observation that
households and firms interacting in markets act
as if guided by an “invisible hand.”
• Because households and firms look at prices when
deciding what to buy and sell, they unknowingly
take into account the social costs of their actions.
• As a result, prices guide decision makers to reach
outcomes that tend to maximize the welfare of
society as a whole.
Copyright © 2004 South-Western/Thomson Learning
Principle #7: Governments Can Sometimes
Improve Market Outcomes.
• Market failure occurs when the market fails to
allocate resources efficiently.
• When the market fails (breaks down)
government can intervene to promote efficiency
and equity.
Copyright © 2004 South-Western/Thomson Learning
Principle #7: Governments Can Sometimes
Improve Market Outcomes.
• Market failure may be caused by
• an externality, which is the impact of one person or
firm’s actions on the well-being of a bystander.
• market power, which is the ability of a single
person or firm to unduly influence market prices.
Copyright © 2004 South-Western/Thomson Learning
Principle #8: The Standard of Living Depends
on a Country’s Production.
• Standard of living may be measured in different
ways:
• By comparing personal incomes.
• By comparing the total market value of a nation’s
production.
Copyright © 2004 South-Western/Thomson Learning
Principle #8: The Standard of Living Depends
on a Country’s Production.
• Almost all variations in living standards are
explained by differences in countries’
productivities.
• Productivity is the amount of goods and
services produced from each hour of a worker’s
time.
Copyright © 2004 South-Western/Thomson Learning
Principle #8: The Standard of Living Depends
on a Country’s Production.
• Standard of living may be measured in different
ways:
• By comparing personal incomes.
• By comparing the total market value of a nation’s
production.
Copyright © 2004 South-Western/Thomson Learning
Principle #9: Prices Rise When the
Government Prints Too Much Money.
• Inflation is an increase in the overall level of
prices in the economy.
• One cause of inflation is the growth in the
quantity of money.
• When the government creates large quantities
of money, the value of the money falls.
Copyright © 2004 South-Western/Thomson Learning
Principle #10: Society Faces a Short-run
Tradeoff Between Inflation and
Unemployment.
• The Phillips Curve illustrates the tradeoff
between inflation and unemployment:
Inflation  Unemployment
It’s a short-run tradeoff!
Copyright © 2004 South-Western/Thomson Learning
Summary
• When individuals make decisions, they face
tradeoffs among alternative goals.
• The cost of any action is measured in terms of
foregone opportunities.
• Rational people make decisions by comparing
marginal costs and marginal benefits.
• People change their behavior in response to the
incentives they face.
Copyright © 2004 South-Western/Thomson Learning
Summary
• Trade can be mutually beneficial.
• Markets are usually a good way of coordinating
trade among people.
• Government can potentially improve market
outcomes if there is some market failure or if
the market outcome is inequitable.
Copyright © 2004 South-Western/Thomson Learning
Summary
• 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.

More Related Content

What's hot

ten principles of economics
ten principles of economicsten principles of economics
ten principles of economicsitmamul akwan
 
01 micro he-mbbs - copy
01 micro he-mbbs - copy01 micro he-mbbs - copy
01 micro he-mbbs - copyjhadivyanshu
 
10 principles of economics
10 principles of economics10 principles of economics
10 principles of economicsJohn Cousins
 
Ten principles of economics
Ten principles of economicsTen principles of economics
Ten principles of economicsjalpesh joshi
 
10 Principles of Economics
10 Principles of Economics10 Principles of Economics
10 Principles of EconomicsMBA ASAP
 
Mba 1 me u 1.1 introduction
Mba 1 me u 1.1 introductionMba 1 me u 1.1 introduction
Mba 1 me u 1.1 introductionBhavik Panchal
 
Ten Principles of Economics
Ten Principles of EconomicsTen Principles of Economics
Ten Principles of EconomicsTuul Tuul
 
Ten principles of economics ppt MBA
Ten principles of economics ppt  MBATen principles of economics ppt  MBA
Ten principles of economics ppt MBABabasab Patil
 
Ten principles of economics
Ten principles of economicsTen principles of economics
Ten principles of economicsDr. Subir Maitra
 
Introduction to Economics
Introduction to EconomicsIntroduction to Economics
Introduction to EconomicsSunnyLuigiPrado
 
7 principles of Economics
7 principles of Economics7 principles of Economics
7 principles of Economicsgodekr
 

What's hot (14)

ten principles of economics
ten principles of economicsten principles of economics
ten principles of economics
 
01 micro he-mbbs - copy
01 micro he-mbbs - copy01 micro he-mbbs - copy
01 micro he-mbbs - copy
 
10 principles of economics
10 principles of economics10 principles of economics
10 principles of economics
 
Ten principles of economics
Ten principles of economicsTen principles of economics
Ten principles of economics
 
10 Principles of Economics
10 Principles of Economics10 Principles of Economics
10 Principles of Economics
 
Chap 01
Chap 01Chap 01
Chap 01
 
Ten principles of Economics
Ten principles of Economics Ten principles of Economics
Ten principles of Economics
 
10 principles of economics
10 principles of economics10 principles of economics
10 principles of economics
 
Mba 1 me u 1.1 introduction
Mba 1 me u 1.1 introductionMba 1 me u 1.1 introduction
Mba 1 me u 1.1 introduction
 
Ten Principles of Economics
Ten Principles of EconomicsTen Principles of Economics
Ten Principles of Economics
 
Ten principles of economics ppt MBA
Ten principles of economics ppt  MBATen principles of economics ppt  MBA
Ten principles of economics ppt MBA
 
Ten principles of economics
Ten principles of economicsTen principles of economics
Ten principles of economics
 
Introduction to Economics
Introduction to EconomicsIntroduction to Economics
Introduction to Economics
 
7 principles of Economics
7 principles of Economics7 principles of Economics
7 principles of Economics
 

Viewers also liked

nơi nào thiết kế tvc quảng cáo theo yêu cầu
nơi nào thiết kế tvc quảng cáo theo yêu cầunơi nào thiết kế tvc quảng cáo theo yêu cầu
nơi nào thiết kế tvc quảng cáo theo yêu cầucalvin832
 
bảng giá làm phim quảng cáo 3d
bảng giá làm phim quảng cáo 3dbảng giá làm phim quảng cáo 3d
bảng giá làm phim quảng cáo 3davril691
 
Gobierno Abierto desde la perspectiva de una ciudadanía activa.
Gobierno Abierto desde la perspectiva de una ciudadanía activa.Gobierno Abierto desde la perspectiva de una ciudadanía activa.
Gobierno Abierto desde la perspectiva de una ciudadanía activa.OpenKratio
 
tư vấn làm tvc quảng cáo kiến trúc
tư vấn làm tvc quảng cáo kiến trúctư vấn làm tvc quảng cáo kiến trúc
tư vấn làm tvc quảng cáo kiến trúcjeffry855
 
Sistemas Informaticos
Sistemas InformaticosSistemas Informaticos
Sistemas InformaticosKevin Jama
 
SIGNWRITING SYMPOSIUM PRESENTATION 24: SignWriting in Brazilian Deaf Educati...
SIGNWRITING SYMPOSIUM PRESENTATION 24:  SignWriting in Brazilian Deaf Educati...SIGNWRITING SYMPOSIUM PRESENTATION 24:  SignWriting in Brazilian Deaf Educati...
SIGNWRITING SYMPOSIUM PRESENTATION 24: SignWriting in Brazilian Deaf Educati...SignWriting For Sign Languages
 
Hibridaciones del carbono.
Hibridaciones del carbono.Hibridaciones del carbono.
Hibridaciones del carbono.Andrea Fuentes
 
Historia, arquitectura y urbanismo en el Valle del Mantaro
Historia, arquitectura y urbanismo en el Valle del MantaroHistoria, arquitectura y urbanismo en el Valle del Mantaro
Historia, arquitectura y urbanismo en el Valle del MantaroGusstock Concha Flores
 
Acqua Villa Nha Trang E - Brochure EN
Acqua Villa Nha Trang E - Brochure ENAcqua Villa Nha Trang E - Brochure EN
Acqua Villa Nha Trang E - Brochure ENAlternaty
 
PN_Flyer_Glassman Europe 2015_May15
PN_Flyer_Glassman Europe 2015_May15PN_Flyer_Glassman Europe 2015_May15
PN_Flyer_Glassman Europe 2015_May15Pneumofore
 
Sproule Reference-December 22, 2008
Sproule Reference-December 22, 2008Sproule Reference-December 22, 2008
Sproule Reference-December 22, 2008Lorraine Stratkotter
 
دعوة الى الجنة
دعوة الى الجنةدعوة الى الجنة
دعوة الى الجنةFacebook
 

Viewers also liked (15)

nơi nào thiết kế tvc quảng cáo theo yêu cầu
nơi nào thiết kế tvc quảng cáo theo yêu cầunơi nào thiết kế tvc quảng cáo theo yêu cầu
nơi nào thiết kế tvc quảng cáo theo yêu cầu
 
bảng giá làm phim quảng cáo 3d
bảng giá làm phim quảng cáo 3dbảng giá làm phim quảng cáo 3d
bảng giá làm phim quảng cáo 3d
 
Gobierno Abierto desde la perspectiva de una ciudadanía activa.
Gobierno Abierto desde la perspectiva de una ciudadanía activa.Gobierno Abierto desde la perspectiva de una ciudadanía activa.
Gobierno Abierto desde la perspectiva de una ciudadanía activa.
 
tư vấn làm tvc quảng cáo kiến trúc
tư vấn làm tvc quảng cáo kiến trúctư vấn làm tvc quảng cáo kiến trúc
tư vấn làm tvc quảng cáo kiến trúc
 
Manajemen persentation
Manajemen persentation  Manajemen persentation
Manajemen persentation
 
Sistemas Informaticos
Sistemas InformaticosSistemas Informaticos
Sistemas Informaticos
 
SIGNWRITING SYMPOSIUM PRESENTATION 24: SignWriting in Brazilian Deaf Educati...
SIGNWRITING SYMPOSIUM PRESENTATION 24:  SignWriting in Brazilian Deaf Educati...SIGNWRITING SYMPOSIUM PRESENTATION 24:  SignWriting in Brazilian Deaf Educati...
SIGNWRITING SYMPOSIUM PRESENTATION 24: SignWriting in Brazilian Deaf Educati...
 
Hibridaciones del carbono.
Hibridaciones del carbono.Hibridaciones del carbono.
Hibridaciones del carbono.
 
Historia, arquitectura y urbanismo en el Valle del Mantaro
Historia, arquitectura y urbanismo en el Valle del MantaroHistoria, arquitectura y urbanismo en el Valle del Mantaro
Historia, arquitectura y urbanismo en el Valle del Mantaro
 
Acqua Villa Nha Trang E - Brochure EN
Acqua Villa Nha Trang E - Brochure ENAcqua Villa Nha Trang E - Brochure EN
Acqua Villa Nha Trang E - Brochure EN
 
master
mastermaster
master
 
PN_Flyer_Glassman Europe 2015_May15
PN_Flyer_Glassman Europe 2015_May15PN_Flyer_Glassman Europe 2015_May15
PN_Flyer_Glassman Europe 2015_May15
 
Sproule Reference-May 1, 2007
Sproule Reference-May 1, 2007Sproule Reference-May 1, 2007
Sproule Reference-May 1, 2007
 
Sproule Reference-December 22, 2008
Sproule Reference-December 22, 2008Sproule Reference-December 22, 2008
Sproule Reference-December 22, 2008
 
دعوة الى الجنة
دعوة الى الجنةدعوة الى الجنة
دعوة الى الجنة
 

Similar to Ten principles

1 ten_principles.ppt
1 ten_principles.ppt1 ten_principles.ppt
1 ten_principles.pptssuserece72a
 
1ten_principles - Copy.ppt
1ten_principles - Copy.ppt1ten_principles - Copy.ppt
1ten_principles - Copy.pptAbir976617
 
Mba 1 me u 1.1 introduction
Mba 1 me u 1.1 introductionMba 1 me u 1.1 introduction
Mba 1 me u 1.1 introductionRai University
 
01_4E - Ten Principles of Economics.ppt
01_4E - Ten Principles of Economics.ppt01_4E - Ten Principles of Economics.ppt
01_4E - Ten Principles of Economics.pptSanjaySolanki78
 
Ten principles
Ten principlesTen principles
Ten principlessavinee
 
Ten principles
Ten principlesTen principles
Ten principlessavinee
 
Ten principles (1)
Ten principles (1)Ten principles (1)
Ten principles (1)Umar Farooq
 
10 principles of economics
10 principles of economics10 principles of economics
10 principles of economicsmitalpt
 
Ch. 1 - Ten Principles of Economics 1.ppt
Ch. 1 - Ten Principles of Economics 1.pptCh. 1 - Ten Principles of Economics 1.ppt
Ch. 1 - Ten Principles of Economics 1.pptSamiraQuliyeva2
 
Ch. 1 - Ten Principles of Economics 1.ppt
Ch. 1 - Ten Principles of Economics 1.pptCh. 1 - Ten Principles of Economics 1.ppt
Ch. 1 - Ten Principles of Economics 1.pptCharlesAdams73
 

Similar to Ten principles (16)

1 ten_principles.ppt
1 ten_principles.ppt1 ten_principles.ppt
1 ten_principles.ppt
 
1ten_principles - Copy.ppt
1ten_principles - Copy.ppt1ten_principles - Copy.ppt
1ten_principles - Copy.ppt
 
Mba 1 me u 1.1 introduction
Mba 1 me u 1.1 introductionMba 1 me u 1.1 introduction
Mba 1 me u 1.1 introduction
 
01_4E - Ten Principles of Economics.ppt
01_4E - Ten Principles of Economics.ppt01_4E - Ten Principles of Economics.ppt
01_4E - Ten Principles of Economics.ppt
 
Ten principles
Ten principlesTen principles
Ten principles
 
Ten principles
Ten principlesTen principles
Ten principles
 
1
11
1
 
Ten principles
Ten principlesTen principles
Ten principles
 
Ten principles (1)
Ten principles (1)Ten principles (1)
Ten principles (1)
 
10 principles of economics
10 principles of economics10 principles of economics
10 principles of economics
 
Pertemuan 1.ppt
Pertemuan 1.pptPertemuan 1.ppt
Pertemuan 1.ppt
 
Ch1 sec1
Ch1 sec1Ch1 sec1
Ch1 sec1
 
Ch. 1.ppt
Ch. 1.pptCh. 1.ppt
Ch. 1.ppt
 
Ch. 1 - Ten Principles of Economics 1.ppt
Ch. 1 - Ten Principles of Economics 1.pptCh. 1 - Ten Principles of Economics 1.ppt
Ch. 1 - Ten Principles of Economics 1.ppt
 
Ch. 1 - Ten Principles of Economics 1.ppt
Ch. 1 - Ten Principles of Economics 1.pptCh. 1 - Ten Principles of Economics 1.ppt
Ch. 1 - Ten Principles of Economics 1.ppt
 
Mankiw
MankiwMankiw
Mankiw
 

Recently uploaded

Russian Call Girls In Gurgaon ❤️8448577510 ⊹Best Escorts Service In 24/7 Delh...
Russian Call Girls In Gurgaon ❤️8448577510 ⊹Best Escorts Service In 24/7 Delh...Russian Call Girls In Gurgaon ❤️8448577510 ⊹Best Escorts Service In 24/7 Delh...
Russian Call Girls In Gurgaon ❤️8448577510 ⊹Best Escorts Service In 24/7 Delh...lizamodels9
 
Uneak White's Personal Brand Exploration Presentation
Uneak White's Personal Brand Exploration PresentationUneak White's Personal Brand Exploration Presentation
Uneak White's Personal Brand Exploration Presentationuneakwhite
 
How to Get Started in Social Media for Art League City
How to Get Started in Social Media for Art League CityHow to Get Started in Social Media for Art League City
How to Get Started in Social Media for Art League CityEric T. Tung
 
Business Model Canvas (BMC)- A new venture concept
Business Model Canvas (BMC)-  A new venture conceptBusiness Model Canvas (BMC)-  A new venture concept
Business Model Canvas (BMC)- A new venture conceptP&CO
 
Call Now ☎️🔝 9332606886🔝 Call Girls ❤ Service In Bhilwara Female Escorts Serv...
Call Now ☎️🔝 9332606886🔝 Call Girls ❤ Service In Bhilwara Female Escorts Serv...Call Now ☎️🔝 9332606886🔝 Call Girls ❤ Service In Bhilwara Female Escorts Serv...
Call Now ☎️🔝 9332606886🔝 Call Girls ❤ Service In Bhilwara Female Escorts Serv...Anamikakaur10
 
Call Girls Service In Old Town Dubai ((0551707352)) Old Town Dubai Call Girl ...
Call Girls Service In Old Town Dubai ((0551707352)) Old Town Dubai Call Girl ...Call Girls Service In Old Town Dubai ((0551707352)) Old Town Dubai Call Girl ...
Call Girls Service In Old Town Dubai ((0551707352)) Old Town Dubai Call Girl ...allensay1
 
Malegaon Call Girls Service ☎ ️82500–77686 ☎️ Enjoy 24/7 Escort Service
Malegaon Call Girls Service ☎ ️82500–77686 ☎️ Enjoy 24/7 Escort ServiceMalegaon Call Girls Service ☎ ️82500–77686 ☎️ Enjoy 24/7 Escort Service
Malegaon Call Girls Service ☎ ️82500–77686 ☎️ Enjoy 24/7 Escort ServiceDamini Dixit
 
Call Girls Zirakpur👧 Book Now📱7837612180 📞👉Call Girl Service In Zirakpur No A...
Call Girls Zirakpur👧 Book Now📱7837612180 📞👉Call Girl Service In Zirakpur No A...Call Girls Zirakpur👧 Book Now📱7837612180 📞👉Call Girl Service In Zirakpur No A...
Call Girls Zirakpur👧 Book Now📱7837612180 📞👉Call Girl Service In Zirakpur No A...Sheetaleventcompany
 
Chandigarh Escorts Service 📞8868886958📞 Just📲 Call Nihal Chandigarh Call Girl...
Chandigarh Escorts Service 📞8868886958📞 Just📲 Call Nihal Chandigarh Call Girl...Chandigarh Escorts Service 📞8868886958📞 Just📲 Call Nihal Chandigarh Call Girl...
Chandigarh Escorts Service 📞8868886958📞 Just📲 Call Nihal Chandigarh Call Girl...Sheetaleventcompany
 
Eluru Call Girls Service ☎ ️93326-06886 ❤️‍🔥 Enjoy 24/7 Escort Service
Eluru Call Girls Service ☎ ️93326-06886 ❤️‍🔥 Enjoy 24/7 Escort ServiceEluru Call Girls Service ☎ ️93326-06886 ❤️‍🔥 Enjoy 24/7 Escort Service
Eluru Call Girls Service ☎ ️93326-06886 ❤️‍🔥 Enjoy 24/7 Escort ServiceDamini Dixit
 
Organizational Transformation Lead with Culture
Organizational Transformation Lead with CultureOrganizational Transformation Lead with Culture
Organizational Transformation Lead with CultureSeta Wicaksana
 
Value Proposition canvas- Customer needs and pains
Value Proposition canvas- Customer needs and painsValue Proposition canvas- Customer needs and pains
Value Proposition canvas- Customer needs and painsP&CO
 
Marel Q1 2024 Investor Presentation from May 8, 2024
Marel Q1 2024 Investor Presentation from May 8, 2024Marel Q1 2024 Investor Presentation from May 8, 2024
Marel Q1 2024 Investor Presentation from May 8, 2024Marel
 
FULL ENJOY Call Girls In Majnu Ka Tilla, Delhi Contact Us 8377877756
FULL ENJOY Call Girls In Majnu Ka Tilla, Delhi Contact Us 8377877756FULL ENJOY Call Girls In Majnu Ka Tilla, Delhi Contact Us 8377877756
FULL ENJOY Call Girls In Majnu Ka Tilla, Delhi Contact Us 8377877756dollysharma2066
 
FULL ENJOY Call Girls In Mahipalpur Delhi Contact Us 8377877756
FULL ENJOY Call Girls In Mahipalpur Delhi Contact Us 8377877756FULL ENJOY Call Girls In Mahipalpur Delhi Contact Us 8377877756
FULL ENJOY Call Girls In Mahipalpur Delhi Contact Us 8377877756dollysharma2066
 
Mysore Call Girls 8617370543 WhatsApp Number 24x7 Best Services
Mysore Call Girls 8617370543 WhatsApp Number 24x7 Best ServicesMysore Call Girls 8617370543 WhatsApp Number 24x7 Best Services
Mysore Call Girls 8617370543 WhatsApp Number 24x7 Best ServicesDipal Arora
 
Call Girls Electronic City Just Call 👗 7737669865 👗 Top Class Call Girl Servi...
Call Girls Electronic City Just Call 👗 7737669865 👗 Top Class Call Girl Servi...Call Girls Electronic City Just Call 👗 7737669865 👗 Top Class Call Girl Servi...
Call Girls Electronic City Just Call 👗 7737669865 👗 Top Class Call Girl Servi...amitlee9823
 
It will be International Nurses' Day on 12 May
It will be International Nurses' Day on 12 MayIt will be International Nurses' Day on 12 May
It will be International Nurses' Day on 12 MayNZSG
 
Quick Doctor In Kuwait +2773`7758`557 Kuwait Doha Qatar Dubai Abu Dhabi Sharj...
Quick Doctor In Kuwait +2773`7758`557 Kuwait Doha Qatar Dubai Abu Dhabi Sharj...Quick Doctor In Kuwait +2773`7758`557 Kuwait Doha Qatar Dubai Abu Dhabi Sharj...
Quick Doctor In Kuwait +2773`7758`557 Kuwait Doha Qatar Dubai Abu Dhabi Sharj...daisycvs
 
Call Girls in Delhi, Escort Service Available 24x7 in Delhi 959961-/-3876
Call Girls in Delhi, Escort Service Available 24x7 in Delhi 959961-/-3876Call Girls in Delhi, Escort Service Available 24x7 in Delhi 959961-/-3876
Call Girls in Delhi, Escort Service Available 24x7 in Delhi 959961-/-3876dlhescort
 

Recently uploaded (20)

Russian Call Girls In Gurgaon ❤️8448577510 ⊹Best Escorts Service In 24/7 Delh...
Russian Call Girls In Gurgaon ❤️8448577510 ⊹Best Escorts Service In 24/7 Delh...Russian Call Girls In Gurgaon ❤️8448577510 ⊹Best Escorts Service In 24/7 Delh...
Russian Call Girls In Gurgaon ❤️8448577510 ⊹Best Escorts Service In 24/7 Delh...
 
Uneak White's Personal Brand Exploration Presentation
Uneak White's Personal Brand Exploration PresentationUneak White's Personal Brand Exploration Presentation
Uneak White's Personal Brand Exploration Presentation
 
How to Get Started in Social Media for Art League City
How to Get Started in Social Media for Art League CityHow to Get Started in Social Media for Art League City
How to Get Started in Social Media for Art League City
 
Business Model Canvas (BMC)- A new venture concept
Business Model Canvas (BMC)-  A new venture conceptBusiness Model Canvas (BMC)-  A new venture concept
Business Model Canvas (BMC)- A new venture concept
 
Call Now ☎️🔝 9332606886🔝 Call Girls ❤ Service In Bhilwara Female Escorts Serv...
Call Now ☎️🔝 9332606886🔝 Call Girls ❤ Service In Bhilwara Female Escorts Serv...Call Now ☎️🔝 9332606886🔝 Call Girls ❤ Service In Bhilwara Female Escorts Serv...
Call Now ☎️🔝 9332606886🔝 Call Girls ❤ Service In Bhilwara Female Escorts Serv...
 
Call Girls Service In Old Town Dubai ((0551707352)) Old Town Dubai Call Girl ...
Call Girls Service In Old Town Dubai ((0551707352)) Old Town Dubai Call Girl ...Call Girls Service In Old Town Dubai ((0551707352)) Old Town Dubai Call Girl ...
Call Girls Service In Old Town Dubai ((0551707352)) Old Town Dubai Call Girl ...
 
Malegaon Call Girls Service ☎ ️82500–77686 ☎️ Enjoy 24/7 Escort Service
Malegaon Call Girls Service ☎ ️82500–77686 ☎️ Enjoy 24/7 Escort ServiceMalegaon Call Girls Service ☎ ️82500–77686 ☎️ Enjoy 24/7 Escort Service
Malegaon Call Girls Service ☎ ️82500–77686 ☎️ Enjoy 24/7 Escort Service
 
Call Girls Zirakpur👧 Book Now📱7837612180 📞👉Call Girl Service In Zirakpur No A...
Call Girls Zirakpur👧 Book Now📱7837612180 📞👉Call Girl Service In Zirakpur No A...Call Girls Zirakpur👧 Book Now📱7837612180 📞👉Call Girl Service In Zirakpur No A...
Call Girls Zirakpur👧 Book Now📱7837612180 📞👉Call Girl Service In Zirakpur No A...
 
Chandigarh Escorts Service 📞8868886958📞 Just📲 Call Nihal Chandigarh Call Girl...
Chandigarh Escorts Service 📞8868886958📞 Just📲 Call Nihal Chandigarh Call Girl...Chandigarh Escorts Service 📞8868886958📞 Just📲 Call Nihal Chandigarh Call Girl...
Chandigarh Escorts Service 📞8868886958📞 Just📲 Call Nihal Chandigarh Call Girl...
 
Eluru Call Girls Service ☎ ️93326-06886 ❤️‍🔥 Enjoy 24/7 Escort Service
Eluru Call Girls Service ☎ ️93326-06886 ❤️‍🔥 Enjoy 24/7 Escort ServiceEluru Call Girls Service ☎ ️93326-06886 ❤️‍🔥 Enjoy 24/7 Escort Service
Eluru Call Girls Service ☎ ️93326-06886 ❤️‍🔥 Enjoy 24/7 Escort Service
 
Organizational Transformation Lead with Culture
Organizational Transformation Lead with CultureOrganizational Transformation Lead with Culture
Organizational Transformation Lead with Culture
 
Value Proposition canvas- Customer needs and pains
Value Proposition canvas- Customer needs and painsValue Proposition canvas- Customer needs and pains
Value Proposition canvas- Customer needs and pains
 
Marel Q1 2024 Investor Presentation from May 8, 2024
Marel Q1 2024 Investor Presentation from May 8, 2024Marel Q1 2024 Investor Presentation from May 8, 2024
Marel Q1 2024 Investor Presentation from May 8, 2024
 
FULL ENJOY Call Girls In Majnu Ka Tilla, Delhi Contact Us 8377877756
FULL ENJOY Call Girls In Majnu Ka Tilla, Delhi Contact Us 8377877756FULL ENJOY Call Girls In Majnu Ka Tilla, Delhi Contact Us 8377877756
FULL ENJOY Call Girls In Majnu Ka Tilla, Delhi Contact Us 8377877756
 
FULL ENJOY Call Girls In Mahipalpur Delhi Contact Us 8377877756
FULL ENJOY Call Girls In Mahipalpur Delhi Contact Us 8377877756FULL ENJOY Call Girls In Mahipalpur Delhi Contact Us 8377877756
FULL ENJOY Call Girls In Mahipalpur Delhi Contact Us 8377877756
 
Mysore Call Girls 8617370543 WhatsApp Number 24x7 Best Services
Mysore Call Girls 8617370543 WhatsApp Number 24x7 Best ServicesMysore Call Girls 8617370543 WhatsApp Number 24x7 Best Services
Mysore Call Girls 8617370543 WhatsApp Number 24x7 Best Services
 
Call Girls Electronic City Just Call 👗 7737669865 👗 Top Class Call Girl Servi...
Call Girls Electronic City Just Call 👗 7737669865 👗 Top Class Call Girl Servi...Call Girls Electronic City Just Call 👗 7737669865 👗 Top Class Call Girl Servi...
Call Girls Electronic City Just Call 👗 7737669865 👗 Top Class Call Girl Servi...
 
It will be International Nurses' Day on 12 May
It will be International Nurses' Day on 12 MayIt will be International Nurses' Day on 12 May
It will be International Nurses' Day on 12 May
 
Quick Doctor In Kuwait +2773`7758`557 Kuwait Doha Qatar Dubai Abu Dhabi Sharj...
Quick Doctor In Kuwait +2773`7758`557 Kuwait Doha Qatar Dubai Abu Dhabi Sharj...Quick Doctor In Kuwait +2773`7758`557 Kuwait Doha Qatar Dubai Abu Dhabi Sharj...
Quick Doctor In Kuwait +2773`7758`557 Kuwait Doha Qatar Dubai Abu Dhabi Sharj...
 
Call Girls in Delhi, Escort Service Available 24x7 in Delhi 959961-/-3876
Call Girls in Delhi, Escort Service Available 24x7 in Delhi 959961-/-3876Call Girls in Delhi, Escort Service Available 24x7 in Delhi 959961-/-3876
Call Girls in Delhi, Escort Service Available 24x7 in Delhi 959961-/-3876
 

Ten principles

  • 1. PowerPoint® Lecture Presentation to accompany Principles of Economics, Third Edition N. Gregory Mankiw Prepared by Mark P. Karscig, Central Missouri State University.
  • 3. Copyright © 2004 South-Western/Thomson Learning 11Ten Principles of Economics
  • 4. Copyright © 2004 South-Western/Thomson Learning Economy. . . . . . The word economy comes from a Greek word for “one who manages a household.”
  • 5. Copyright © 2004 South-Western/Thomson Learning TEN PRINCIPLES OF ECONOMICS • A household and an economy face many decisions: • Who will work? • What goods and how many of them should be produced? • What resources should be used in production? • At what price should the goods be sold?
  • 6. Copyright © 2004 South-Western/Thomson Learning TEN PRINCIPLES OF ECONOMICS Society and Scarce Resources: • The management of society’s resources is important because resources are scarce. • Scarcity. . . means that society has limited resources and therefore cannot produce all the goods and services people wish to have.
  • 7. Copyright © 2004 South-Western/Thomson Learning TEN PRINCIPLES OF ECONOMICS Economics is the study of how society manages its scarce resources.
  • 8. Copyright © 2004 South-Western/Thomson Learning TEN PRINCIPLES OF ECONOMICS • How people make decisions. • People face tradeoffs. • The cost of something is what you give up to get it. • Rational people think at the margin. • People respond to incentives.
  • 9. Copyright © 2004 South-Western/Thomson Learning TEN PRINCIPLES OF ECONOMICS • How people interact with each other. • Trade can make everyone better off. • Markets are usually a good way to organize economic activity. • Governments can sometimes improve economic outcomes.
  • 10. Copyright © 2004 South-Western/Thomson Learning TEN PRINCIPLES OF ECONOMICS • The forces and trends that affect how the economy as a whole works. • The standard of living depends on a country’s production. • Prices rise when the government prints too much money. • Society faces a short-run tradeoff between inflation and unemployment.
  • 11. Copyright © 2004 South-Western/Thomson Learning Principle #1: People Face Tradeoffs. “There is no such thing as a free lunch!”
  • 12. Copyright © 2004 South-Western/Thomson Learning Making decisions requires trading off one goal against another. Principle #1: People Face Tradeoffs. To get one thing, we usually have to give up another thing. • Guns v. butter • Food v. clothing • Leisure time v. work • Efficiency v. equity
  • 13. Copyright © 2004 South-Western/Thomson Learning Principle #1: People Face Tradeoffs • Efficiency v. Equity • Efficiency means society gets the most that it can from its scarce resources. • Equity means the benefits of those resources are distributed fairly among the members of society.
  • 14. Copyright © 2004 South-Western/Thomson Learning Principle #2: The Cost of Something Is What You Give Up to Get It. • Decisions require comparing costs and benefits of alternatives. • Whether to go to college or to work? • Whether to study or go out on a date? • Whether to go to class or sleep in? • The opportunity cost of an item is what you give up to obtain that item.
  • 15. Copyright © 2004 South-Western/Thomson Learning Principle #2: The Cost of Something Is What You Give Up to Get It. LA Laker basketball star Kobe Bryant chose to skip college and go straight from high school to the pros where he has earned millions of dollars.
  • 16. Copyright © 2004 South-Western/Thomson Learning People make decisions by comparing costs and benefits at the margin. Principle #3: Rational People Think at the Margin. • Marginal changes are small, incremental adjustments to an existing plan of action.
  • 17. Copyright © 2004 South-Western/Thomson Learning Principle #4: People Respond to Incentives. • Marginal changes in costs or benefits motivate people to respond. • The decision to choose one alternative over another occurs when that alternative’s marginal benefits exceed its marginal costs!
  • 18. Copyright © 2004 South-Western/Thomson Learning Principle #5: Trade Can Make Everyone Better Off. • People gain from their ability to trade with one another. • Competition results in gains from trading. • Trade allows people to specialize in what they do best.
  • 19. Copyright © 2004 South-Western/Thomson Learning Principle #6: Markets Are Usually a Good Way to Organize Economic Activity. • A market economy is an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services. • Households decide what to buy and who to work for. • Firms decide who to hire and what to produce.
  • 20. Copyright © 2004 South-Western/Thomson Learning Principle #6: Markets Are Usually a Good Way to Organize Economic Activity. • Adam Smith made the observation that households and firms interacting in markets act as if guided by an “invisible hand.” • Because households and firms look at prices when deciding what to buy and sell, they unknowingly take into account the social costs of their actions. • As a result, prices guide decision makers to reach outcomes that tend to maximize the welfare of society as a whole.
  • 21. Copyright © 2004 South-Western/Thomson Learning Principle #7: Governments Can Sometimes Improve Market Outcomes. • Market failure occurs when the market fails to allocate resources efficiently. • When the market fails (breaks down) government can intervene to promote efficiency and equity.
  • 22. Copyright © 2004 South-Western/Thomson Learning Principle #7: Governments Can Sometimes Improve Market Outcomes. • Market failure may be caused by • an externality, which is the impact of one person or firm’s actions on the well-being of a bystander. • market power, which is the ability of a single person or firm to unduly influence market prices.
  • 23. Copyright © 2004 South-Western/Thomson Learning Principle #8: The Standard of Living Depends on a Country’s Production. • Standard of living may be measured in different ways: • By comparing personal incomes. • By comparing the total market value of a nation’s production.
  • 24. Copyright © 2004 South-Western/Thomson Learning Principle #8: The Standard of Living Depends on a Country’s Production. • Almost all variations in living standards are explained by differences in countries’ productivities. • Productivity is the amount of goods and services produced from each hour of a worker’s time.
  • 25. Copyright © 2004 South-Western/Thomson Learning Principle #8: The Standard of Living Depends on a Country’s Production. • Standard of living may be measured in different ways: • By comparing personal incomes. • By comparing the total market value of a nation’s production.
  • 26. Copyright © 2004 South-Western/Thomson Learning Principle #9: Prices Rise When the Government Prints Too Much Money. • Inflation is an increase in the overall level of prices in the economy. • One cause of inflation is the growth in the quantity of money. • When the government creates large quantities of money, the value of the money falls.
  • 27. Copyright © 2004 South-Western/Thomson Learning Principle #10: Society Faces a Short-run Tradeoff Between Inflation and Unemployment. • The Phillips Curve illustrates the tradeoff between inflation and unemployment: Inflation  Unemployment It’s a short-run tradeoff!
  • 28. Copyright © 2004 South-Western/Thomson Learning Summary • When individuals make decisions, they face tradeoffs among alternative goals. • The cost of any action is measured in terms of foregone opportunities. • Rational people make decisions by comparing marginal costs and marginal benefits. • People change their behavior in response to the incentives they face.
  • 29. Copyright © 2004 South-Western/Thomson Learning Summary • Trade can be mutually beneficial. • Markets are usually a good way of coordinating trade among people. • Government can potentially improve market outcomes if there is some market failure or if the market outcome is inequitable.
  • 30. Copyright © 2004 South-Western/Thomson Learning Summary • 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.