[自然科学]Some Toolsfor the Economist.pptVIP

Some Tools for the Economist What Shall We Give Up? Opportunity cost: The highest valued activity sacrificed in making a choice. Mutual gain is the foundation of trade. How does the Internet reduce transactions costs and thereby enhance trade? The Importance of Property Rights Property rights: The right to use, control, and obtain benefits from a good or service. Private ownership is a key to prosperity because it provides people with a strong incentive to take care of things and develop resources in ways that are highly valued by others. Private ownership is a key to prosperity because it provides people with a strong incentive to take care of things and develop resources in ways that are highly valued by others. When private property rights are protected and enforced, permission of the owner is required for use of a resource. If you want to use a good or resource, you must either buy or lease it from the owner. Individuals are faced with the cost of using scarce resources. Market prices provide a strong incentive for private owners to consider the desires of others and to use and develop resources that are highly valued by others. Production Possibilities Curve for Susan’s grades in English and Economics (10 hrs of study) An increase in the economy’s resource base would expand our ability to produce goods and services. Trade, Output, and Living Standards Division of labor: breaks down the production of a commodity into a series of tasks performed by different workers. Law of comparative advantage: The proposition that the joint output of trading partners will be greatest when each good is produced by the low opportunity cost producer. Trade is a key to prosperity because it: Is the Size of the Economic Pie Fixed or Variable? At any point in time, output is limited by the resource base. The production possibilities curve highlights this point. Over time, investment and improvements in technology permit us to increase output. Shifts in the production pos