Topic 2.pptVIP

Topic 2 Thinking like an economist Ⅰ. Some principles of economic People face tradeoffs example: guns vs butter 大炮和黄油 leisure time vs work 休闲和工作 efficiency vs equity 效率和公平 Making decisions requires trading off one goal against another. 做决定需要权衡一个对另一个目标 The cost of something is what you give up to get it Decisions require comparing costs and benefits of alternatives. ex: you are about to buy a $25 computer game at the nearby campus store when a friend tells you that the same game is on sale at a downtown store for only $15.where should you buy the game? 然而经济学家说的成本跟一般人讲的差别很大 Whether to go to college or to work? opportunity cost(机会成本): the next best alternative we have to forgo. 放弃的次优选择的价值 ※ Application of opportunity cost 机会成本的应用 The Production Possibilities Frontier （PPF） 生产可能性边界 shows the different combination of two goods that can be produced with a given level of resourced and technology. Law of comparative advantage 比较优势原理 Rational people think at margin Individual consumers or firms are said to be rational when the choices they made are consistent in giving them best satisfaction of their wants. Ⅱ. Economic Models Economists use models to simplify reality in order to improve our understanding of the world Circular flow model 循环流动模型 The circular-flow model is a simple way to visually show the economic transactions that occur between households and firms in the economy. Homework P34 5 P36 9 * * There is no such thing as a free lunch. People face tradeoffs 2. The cost of something is what you give up to get it 3. Rational people think at margin ★ 我国“十一五”规划纲要提出，“十一五”期间单位国内生产总值能耗降低20％左右、主要污染物排放总量减少10％。 Can you think of other example of opportunity cost? Quantity of Computers Produced Quantity of Cars Produced 3,000 0 1,000 2,000 700 1,000 300 A B 2,200 600 C D unattainable point efficiency point inefficiency point absolute advantage: The person who c