CI-Microeconomics-Ch1-Slides-2015

CI-Microeconomics-Ch1-Slides-2015 - Microeconomics Curtis...

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©Microeconomics, Curtis & Irvine, 2015 Chapter 1 1 Chapter 1 Introduction – The Big Ideas Microeconomics, Curtis & Irvine, 2015
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Learning outcomes By the end of this chapter you should understand.. The nature and objective of economics The role of theory, models, hypotheses and data The centrality of government How microeconomics differs from macroeconomics Opportunity cost, productivity advantage and efficiency Specialization, exchange and markets The production possibility frontier Full employment, booms, recessions and economic growth ©Microeconomics, Curtis & Irvine, 2015 Chapter 1 2
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“Economics, at its best, is a set of ideas and methods for the improvement of society. It is not, as so often seems the case today, a set of ideological rules for asserting why we cannot face the challenges of stagnation, job loss and widening inequality.” Christopher Sims, Nobel Laureate in Economics, 2011 A Working Definition of Economics ©Microeconomics, Curtis & Irvine, 2015 Chapter 1 3
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Ideas and Methods Economics is a social science It is concerned with ideas that may improve society It is scientific in its approach Use of mathematics Use of models Use of data and statistical methods Translation of ideas into formal models through mathematics, and testing of the ideas/models through the use of statistical methods (more in chapter 2) ©Microeconomics, Curtis & Irvine, 2015 Chapter 1 4
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Challenges for today’s society Unemployment rates among young people are at historic highs Government balance sheets are in disarray Inequality is on the rise. In addition, the world simultaneously faces structural upheaval: overpopulation climate change political instability globalization These issues challenge us to understand and formulate policies ©Microeconomics, Curtis & Irvine, 2015 Chapter 1 5
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But there is Good News too.. Literacy rates rising dramatically in the developing world Child mortality has plummeted Family size is a fraction of what it was 50 years ago Prosperity is on the rise in much of Asia Life expectancy is increasing universally Deaths through wars are in a state of long term decline. ©Microeconomics, Curtis & Irvine, 2015 Chapter 1 6
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Macroeconomics studies the economy as a system in which feedbacks among sectors determine national output, employment and prices Microeconomics is the study of individual behavior in the context of scarcity In a mixed economy goods and services are supplied both by private suppliers and government ©Microeconomics, Curtis & Irvine, 2015 Chapter 1 7 Microeconomics and Macroeconomics
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Government is not an add-on to our economy.
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