The Economic Problem - University of Victoria - WebUVicca经济问题-维多利亚大学- webuvicca.pptVIP

Econ 102 The Canadian Economy Chapter 1 The Economic Problem Copyright ? 2002 by McGraw-Hill Ryerson Limited. All rights reserved. Chapter Objectives In this chapter, you will: consider the economic problem that underlies the definition of economics; learn about the way economists specify economic choice; examine the production choices an entire economy faces, as demonstrated by the production possibilities model; analyze the three basic economic questions and how various economic systems answer them. Outline of Topics 1.1 What Economists Do 1.2 Economic Choice 1.3 The Production Possibilities Model 1.4 Economic Systems 1.1 What Economists Do The Economic Problem Economists deal with the economic problem. Economic agents must continually make choices. Their wants are unlimited. They face a limited supply of economic resources. Economic resources including natural, capital, and human resources ( see Definitions on page 3) 1.1 What Economists Do Economics Defined Economics is the study of how to distribute scarce resources among competing ends. Microeconomics focuses on individual consumers and businesses. Macroeconomics takes a broad view of the economy. 1.1 What Economists Do Economic Models Economic models: simplify economic reality show how dependent variables are affected by independent variables include inverse and/or direct relationships incorporate a variety of assumptions such as ceteris paribus are classified as part of either positive economics or normative economics (See Definitions on page 5 6) 1.2 Economic Choice Utility Maximization Economists assume that economic decision-makers maximize their own utility. Utility: the satisfaction gained from any action Decision-makers must keep in mind the opportunity cost of each alternative. Opportunity cost: the utility that could have been gained by choosing an action’s best alternative. 1.3 The Production Possibilities Model The production possibilities model is based on th