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Chapter 1 Chapter 1 Preliminaries Topics to be Discussed Ten Principles of Economics The Themes of Microeconomics What Is a Market? Real Versus Nominal Prices TVM Why Study Microeconomics? Ten Principles of Economics Its are that how to answer three problems below. (1) How Do People Make Decisions? (2) How People Interact? (3) How The Economy as a Whole Works? Ten Principles of Economics Principle 1#: People face trade-offs. Ten Principles of Economics Principle 2#: The cost of something is what you give up to get it. Ten Principles of Economics Principle 3#: Rational people think at the margin. Ten Principles of Economics Principle 4#: People respond to incentives. Ten Principles of Economics How People Interact? Principle 5#: Trade can make everyone better off. Ten Principles of Economics How People Interact? Principle 6#: Market is usually a good way to organize economics activity. Ten Principles of Economics How People Interact? Principle 7#: Governments can sometimes improve market outcomes. Ten Principles of Economics How The Economy as a Whole Works? Principle 8#: A country` s standard of living depends on its ability to produce goods and services. Ten Principles of Economics How The Economy as a Whole Works? Principle 9#: Prices rise when the government prints too much money. Ten Principles of Economics How The Economy as a Whole Works? Principle10#: Society faces a short-run trade-off between inflation and unemployment. Economics` branches Economics is divided into two main branches: 1. microeconomics 2. macroeconomics Economics` branches Microeconomics deals with: Behavior of individual units When Consuming How we choose what to buy When Producing How we choose what to produce How much to produce How produce Economics` branches Microeconomics deals with: Markets and industries: The result of interaction of co
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