Chap001 - Chapter 01 - Introduction Part I. Preliminaries...

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Chapter 01 - Introduction Part I. Preliminaries Chapter 1: Introduction Main Concepts and Learning Objectives This chapter provides an overview of the purpose of this textbook: to help students develop a solid understanding of microeconomics, including both the content of microeconomics and the tools needed to undertake microeconomic analyses. Understanding the content of microeconomics will equip students to understand: the major resource allocation questions that must be addressed by every society (what to produce, how to produce these goods and services, and who should enjoy these goods and services), two primary strategies for addressing these questions (markets and government policies), and the interplay between these two strategies, and the critical difference between fact-based positive analysis and value-based normative analysis. Microeconomic analyses are employed in businesses (customer analysis, sales forecasting, financial planning), finance (analysis of factors that influence corporate profits and, therefore, stock prices), and public policy design and evaluation. Students may, in the future, undertake their own microeconomic analyses, or they may be “consumers” who will base important decisions on forecasts or analyses prepared by others. In either event, understanding the tools needed to conduct microeconomic analyses will strengthen the quality of their decisions. These tools include: implementing the scientific method, constructing, employing and assessing the quality of mathematical models, and locating and using data, in conjunction with sound econometric techniques to test models. This textbook will provide examples in which economists have used the first and third skills. It will focus on helping students to develop the second skill. Students may, initially, believe that this tool is completely new. However, we all use models to structure our decision-making processes – probably on a daily basis. Several examples are provided in this chapter. Specifically, students who master the material presented in this chapter will be able to provide examples of: 1. policy issues that involve resource allocation questions (What, How, Who). 2. policy controversies that focus on choices between centralized and decentralized decision-making 3. well-defined markets, and issues that complicate market definitions 4. positive and normative statements 1-1
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Chapter 01 - Introduction 5. models used in everyday decision-making 1-2
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Chapter 01 - Introduction Multiple Choice Quiz (10 questions) covering main points:  1. Figure 1.1 provides information about the percent of GDP that is allocated to government consumption. Which two countries are less decentralized than the United States? a.
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Chap001 - Chapter 01 - Introduction Part I. Preliminaries...

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