Download Introduction to Economics

Welcome to
AP Economics
Mr. Forrest
Macroeconomic Topics






Basic Economic Concepts
Measuring Economic Performance
National Income and Price
Determination
The Financial Sector
Inflation, Unemployment and Fiscal
and Monetary Policies
International Trade
Grading



50% Tests and Quizzes
30% Class work and Homework
20% Final Exam
Students have as many days to make up
missing assignments as they were absent.
Let me know if you will be out for an
extended period due to extra curricular
activities, so we can plan make-up work.
Steps to Success




Complete your
textbook reading on
time.
Stay focused on
classroom lectures and
discussion.
Use a variety of outside
materials to help
prepare for course
tests.
Let me know if you
need extra help.
Classroom Web Page
http://daveforrest.net/Economics


Use the web page
to view daily
assignments, print
out reading guides,
review classroom
presentations,
watch videos or use
web links.
Check if you are
absent to see what
we are up to.
Be Nice and Work Hard
We will have a good year in AP Econ
and AP Gov.
First Homework Assignment



Read Chapter 1 in your textbook by
Friday.
Take notes and be prepared to answer
questions on Friday to see how well
you read
In most college classes there will not
be reading guides. Develop a good
strategy for reading and retaining what
you have read.
THIEVES








One retention strategy you might try is
THIEVES
T - Title
H - Headings
I - Introduction
E - Every first paragraph
V - Visuals and vocabulary
E - End of the Chapter questions
S - Summary
Island Choices


Imagine you were stranded on an
island after a shipwreck. You are not
sure what raw materials are available
on the island, but you can only take 10
of the 20 items from the ship onto land
to help you survive.
Work with your partners to decide
which 10 items to take. Be prepared to
defend your choices in discussion.
Definition of economics



Economics is the study of how scarce
resources are used to satisfy unlimited
wants.
Resources are viewed as scarce because
we never have enough to satisfy all of our
wants.
Scarcity is different than the economic
concept of shortage, which economists view
as the temporary lack of a product.
Necessities and Luxuries



Necessities are goods which satisfy
basic human needs. E.g. food, shelter
and clothing.
Luxuries are goods which consumers
want, but don’t necessarily need.
The line between these two types of
goods is often determined by societal
wealth and values.
Consumer and Producer Goods



Consumer goods are products used
for immediate consumption. E.g. food,
cars, toys
Producer goods are products which
are used to make consumer goods.
They are simple or complex tools.E.g.
hammer, cranes.
Sometimes producer goods are called
intermediate goods, because they are
used in the production process.
The Production Process




Economics studies the production process,
where three factors of production are
combined to make consumer goods.These
three factors are:
Land - natural resources such as: trees,
water, minerals
Labor - mental and manual labor such as:
auto workers or scientists
Capital - Factories, machines (producer
goods) and money
Definition of economics
Economics is the study of how scarce
resources are used to satisfy unlimited
wants.
Rational “self interest”


Economists believe that people choose
options that give them the greatest
satisfaction
People use available information,
weigh costs and benefits, and make a
self interested choice.
Microeconomics

Studies the economy at the level of
individual consumers, firms, and
markets.
Macroeconomics


Macro economics studies the economy
as a whole.
Macro looks at big indicators like
national economic growth, total
consumption, unemployment, price
levels, and international trade.
Positive vs. normative
economics


Positive economics focuses on
measurable outcomes. It does not
impose value judgments or personal
feelings. It views economics as a
science.
Normative economics what ought to be
or what should be. It makes ethical
value judgments on policy.
Economics as a science

Do you agree that economics is a
science, why or why not?
Approximate Costs of College
Tuition
Junior
State
Privates
UC’s
College College
$864
$6489
$13,200 $30,144
Books
$1,659
$1,652
$1,500
$1,455
Live at
Home
$3,000 $8,500 $15,000 $33,000
OnCampus $13,000 $22,577 $28,000 45,147
Paying for College





Parents
Grants
Scholarships
Work-Study
Loans
Trade-offs


Scarcity means there are limited
resources
Individuals,companies, governments,
and nations must make trade-offs on
how to use scarce resources.
Opportunity costs




Economists describe opportunity costs as
the value of the foregone good. The
foregone good is the next best alternative.
For example, Apple Computer may use
factory capacity to make iPods or iPhones. If
the plant can produce 1 iphone for the same
resources it can produce 2 iPods then:
1 iPhone = 2 iPods
1 iPod = 1/2 iPhone
Calculate Opportunity costs



If music downloads are $1 and
attending a movie is $10, calculate the
opportunity costs for music downloads
and then, the opportunity costs for
movies.
1 music downloads = 1/10 movie
1 movie = 10 music downloads
Production Possibilities Graph


A production
possibilities graph
shows the tradeoff
between two goods
The curve is called
the PPC or the
Production
Possibilities Curve