Economics(Paul Krugman,Robin Wells)(克鲁格曼版经济学学生版).doc

CHAPTER 1 First Principles PowerPoint?? Slides by Can Erbil ?? 2004 Worth Publishers, all rights reserved What you will learn in this chapter: Trade Gains from trade Specialization Equilibrium Efficiency and equity A set of principles for understanding the economics of how individuals make choices: Scarcity Opportunity cost Trade-offs Marginal analysis A set of principles for understanding the economics of how individual choices interact: Individual Choice Individual choice is the decision by an individual of what to do, which necessarily involves a decision of what not to do. Basic principles behind the individual choices: 1. Resources are scarce. 2. The real cost of something is what you must give up to get it. 3. “How much?” is a decision at the margin. 4. People usually take advantage of opportunities to make themselves better off. Resources are scarce. A resource is anything that can be used to produce something else. Ex.: Land, labor, capital Resources are scarce—the quantity available isn’t large enough to satisfy all productive uses. Ex.: Petroleum, lumber, intelligence The real cost of something is what you must give up to get it. The real cost of an item is its opportunity cost: what you must give up in order to get it. Opportunity cost is crucial to understanding individual choice: Ex.: The cost of attending the economics class is what you must give up to be in the classroom during the lecture. Sleep? Watching TV? Rock climbing? Work? All costs are ultimately opportunity costs. Opportunity Cost In fact, everybody thinks about opportunity cost. The bumper stickers that say: “I would rather be ….{fishing, golfing, swimming, etc…}” are referring to the “opportunity cost.” It is all about what you have to forgo to obtain your choice. I WOULD RATHER BE SURFING THE INTERNET. “How much?” is a decision at the margin. You make a trade-off when you compare the costs with the benefits of doing something. Decisions about whether to do a bit more or a