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Welcome to
Economics & Society
as a
Business Environment
Foundation Year Academic Program
Prof. Dr. Peter Schmidt
Fall 2015
schmidt-bremen.de
-> EconomicsSociety
Business
Environment
Economics
Quantitative
Methods
Introductions . . .
 Economics
 Lecturer
 Students
Who am I
Peter Schmidt
Economics
& Statistics
ZEW
Zentrum für Europäische
Wirtschaftsforschung Mannheim
market . research . culture
schmidt-bremen.de
-> EconomicsSociety
You
 are highly motivated students 
 have to carry your individual workload:
(10) Principles of
Economics
Every field of study has its own
terminology
Mathematics
integrals
axioms
vector spaces
Psychology
ego
id
torts
Law
Promissory
estoppel
venues
cognitive
dissonance
Every field of study has its own
terminology
Economics
Supply
Opportunity
cost
Comparative
advantage
Elasticity
Consumer
Surplus
Demand
Deadweight
loss
Economics trains you to. . . .
Think in terms of alternatives.
Evaluate the cost of individual and
social choices.
Examine and understand how
certain events and issues are
related.
The Economist as a Scientist
The economic way of thinking . . .
Involves thinking analytically and
objectively.
Makes use of the scientific method.
The Scientific Method
Uses abstract models to help
explain how a complex, real world
operates.
Develops theories, collects, and
analyzes data to support (or
dismiss) the theories.
Observation, Theory and More Observation!
Ten Principles of
Economics
Chapter 1
Copyright © by Harcourt, Inc.
All rights reserved. Requests for permission to make copies of any part of the
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Permissions Department, Harcourt College Publishers,
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A household and an economy
face many decisions:
Who will work?
What goods and how many of
them should be produced?
What resources should be used in
production?
At what price should the goods be
sold?
Society and Scarce Resources:
The management of society’s
resources is important because
resources are scarce.
Scarcity . . .
. . . means that society has limited
resources and therefore cannot
produce all the goods and services
people wish to have.
Economics
Economics is the study of
how society manages its
scarce resources.
Economists study. . .
How people make decisions.
How people interact with each other.
The forces and trends that affect the
economy as a whole.
Ten Principles of Economics
I How People Make Decisions
1.
2.
3.
4.
People face tradeoffs.
The cost of something is what you give up to get it.
Rational people think at the margin.
People respond to incentives.
II How People Interact
5.
6.
7.
Trade can make everyone better off.
Markets are usually a good way to organize economic activity.
Governments can sometimes improve market outcomes.
III How the Economy as a Whole Works
8.
9.
10.
The standard of living depends on a country’s production.
Prices rise when the government prints too much money.
Society faces a short-run tradeoff between inflation and
unemployment.
Ten Principles of Economics
I How People Make Decisions
1. People face tradeoffs.
2. The cost of something is what you
give up to get it.
3. Rational people think at the margin.
4. People respond to incentives.
Ten Principles of Economics
II How People Interact
5. Trade can make everyone better off.
6. Markets are usually a good way to
organize economic activity.
7. Governments can sometimes
improve market outcomes.
Ten Principles of Economics
III How the Economy as a Whole Works
8. The standard of living depends on a
country’s production.
9. Prices rise when the government
prints too much money.
10. Society faces a short-run tradeoff
between inflation and unemployment.
And always remember …
People face tradeoffs !
“There is no such thing
as a free lunch!”