Chapter One - Limits Alternatives and Choices CHAPTERONE...

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Limits, Alternatives, and Choices CHAPTER ONE LIMITS, ALTERNATIVES, AND CHOICES CHAPTER OVERVIEW This chapter begins with a discussion of the meaning and importance of economics.  In this first  chapter, however, we will not plunge into problems and issues; instead we consider some  important preliminaries.  We first look at the economic perspective—how economists think about  problems.  Next, we examine the specific methods economists use to examine economic  behavior and the economy, including distinguishing between macroeconomics and  microeconomics.  We then look at the economizing problem from both an individual and societal  perspective.  For the individual we develop the budget line, for society the production  possibilities model.  In our discussion of production possibilities, the concepts of opportunity  costs and increasing opportunity costs, unemployment, growth, and present vs. future  possibilities are all demonstrated. Finally, in the Last Word, some of the problems, limitations,  and pitfalls that hinder sound economic reasoning are examined. The Appendix to Chapter 1 provides an important introduction to graphical analysis.  While this  will be review material for most students, for some this may be new.  Instructors are strongly  urged to confirm that their students understand this section before proceeding.  The software  supplement can provide effective remedial help for those students who are not familiar with  graphical analysis, or just need a refresher. INSTRUCTIONAL OBJECTIVES After completing this chapter, students should be able to: 1.     Define economics. 2.     Describe the “economic way of thinking,” including definitions of purposeful behavior,  utility, marginal costs, marginal benefits and how these concepts may be used in  decision-making. 3.     Explain how economists use the scientific method to formulate economic principles. 4. Explain the importance of ceteris paribus in formulating economic principles. 5.     Explain the steps used by policy makers. 6.     Differentiate between micro- and macroeconomics. 7.     Differentiate between positive and normative economics. 1
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Limits, Alternatives, and Choices 8.     Explain the economizing problem from the individual’s perspective 9.     Construct and explain a budget line. 10.     Describe the economizing problem facing society. 11.     Identify types of economic  resources and  types of income  associated  with various  factors. 12.     Construct a production possibilities curve when given appropriate data.
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This note was uploaded on 03/06/2010 for the course ECON 1160 taught by Professor Byrke during the Spring '10 term at Macomb Community College.

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Chapter One - Limits Alternatives and Choices CHAPTERONE...

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