Fundamentals of Economics - Chapter 1

7/26/2019 Fundamentals of Economics - Chapter 1

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Fundamentals

Chapter 1


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Main topics

Introduction main themes

Three problems of economic organization

Societys technological limits roduction possibility

!pportunity cost


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Main themes of economics

Main themes Scarcity limited resources" limitless #ants

$fficiency ma%ing the best use of #hat #e

ha&e $conomics' (ho# societies use scarce resources to

produce &aluable commodities ) distribute the to

different people*+

Microeconomics ) macroeconomics

,ogic in economics' post-hoc, ergo propter hoc;fallacy of composition (e.g. saving & AD)


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Main themes of economics- contd**

,ogic in economics'post-hoc, ergo propter hoc;

fallacy of composition (e.g. saving & AD)

Cool heads at the ser&ice of #armhearts neutrality in economic

analysis


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The . problems of economic

organizations

. problems to be sol&ed /hat

0o#

For #hom 0o# societies ha&e sol&ed them' forms of

economic organization Tradition

Communal Feudal

Socialisticcommand

Capitalisticmar%et

mi2ed


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The . problems of economic

organizations- contd3

0o# societies ha&e sol&ed them' forms ofeconomic organization 4y organization

Communal

Tradition

Feudal

command

Mar%et mi2ed

4y o#nership Socialist

Capitalist


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Technological limits

roductionpossibility cur&e

Concept of tradeoffs

Concept of efficiency

!pportunity cost


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The roduction ossibilities in a

5raph

Chapter 1

Figure 1-1


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The roductionossibility

Frontier

Chapter 1

Figure 1-2


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$conomic 5ro#th Shifts

the PPF!ut#ard

Chapter 1

Figure 1-3


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$conomics Must Choose bet#een

ublic 5oods and ri&ate 5oods

Chapter 1

Figure 1-4


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In&estment for Future Consumption

6e7uires Sacrificing Current

Consumption

Chapter 1

Figure 1-5


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Chapter 1

Table 1-1


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8ppendi2 1

0o# to read 5raphs


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Si2 ossible airs of FoodMachine

roduction ,e&els

Appendix 1A

Figure 1A-1


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8 roductionossibility Frontier

Appendix 1A

Figure 1A-2

A i 1A


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Calculation of Slope for Straight

,ines

Appendix 1A

Figure 1A-3

A di 1A


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Steepness Is 9ot the Same as

Slope

Appendix 1A

Figure 1A-4

A di 1A


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Tangent as Slope of Cur&ed

,ine

Appendix 1A

Figure 1A-5

A di 1A


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:ifferent Slopes of 9onlinear

Cur&es

Appendix 1A

Figure 1A-6

A di 1A


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Shift of Cur&es &ersus

Mo&ement along Cur&es

Appendix 1A

Figure 1A-7

A di 1A


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Scatter :iagram of Consumption

Function Sho#s Important

Macroeconomic ,a#

Appendix 1A

Figure 1A-8

Appendix 1A


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Appendix 1A

Table 1A-1

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Fundamentals of Economics - Chapter 1