01 Ten Principles of Economics
PowerPoint® Lecture Presentation to accompany
Principles of Economics, Third Edition
N. Gregory Mankiw
Prepared by Mark P. Karscig, Central Missouri State University.
1
INTRODUCTION
Ten Principles of
Economics
Copyright © 2004 South-Western/Thomson Learning
1
Economy. . .
. . . The word economy comes from a Greek word for “one who manages a household.”
Copyright © 2004 South-Western/Thomson Learning
TEN PRINCIPLES OF
ECONOMICS
• 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?
Copyright © 2004 South-Western/Thomson Learning
TEN PRINCIPLES OF
ECONOMICS
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.
Copyright © 2004 South-Western/Thomson Learning
TEN PRINCIPLES OF
ECONOMICS
Economics is the study of how society manages its scarce resources.
Copyright © 2004 South-Western/Thomson Learning
TEN PRINCIPLES OF
ECONOMICS
• How people make decisions.
•
•
•
•
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.
Copyright © 2004 South-Western/Thomson Learning
TEN PRINCIPLES OF
ECONOMICS
• How people interact with each other.
• Trade can make everyone better off.
• Markets are usually a good way to organize economic activity.
• Governments can sometimes improve economic outcomes. Copyright © 2004 South-Western/Thomson Learning
TEN PRINCIPLES OF
ECONOMICS
• The forces and trends that affect how the economy as a whole works.
• 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.
Principles of Economics, Third Edition
N. Gregory Mankiw
Prepared by Mark P. Karscig, Central Missouri State University.
1
INTRODUCTION
Ten Principles of
Economics
Copyright © 2004 South-Western/Thomson Learning
1
Economy. . .
. . . The word economy comes from a Greek word for “one who manages a household.”
Copyright © 2004 South-Western/Thomson Learning
TEN PRINCIPLES OF
ECONOMICS
• 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?
Copyright © 2004 South-Western/Thomson Learning
TEN PRINCIPLES OF
ECONOMICS
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.
Copyright © 2004 South-Western/Thomson Learning
TEN PRINCIPLES OF
ECONOMICS
Economics is the study of how society manages its scarce resources.
Copyright © 2004 South-Western/Thomson Learning
TEN PRINCIPLES OF
ECONOMICS
• How people make decisions.
•
•
•
•
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.
Copyright © 2004 South-Western/Thomson Learning
TEN PRINCIPLES OF
ECONOMICS
• How people interact with each other.
• Trade can make everyone better off.
• Markets are usually a good way to organize economic activity.
• Governments can sometimes improve economic outcomes. Copyright © 2004 South-Western/Thomson Learning
TEN PRINCIPLES OF
ECONOMICS
• The forces and trends that affect how the economy as a whole works.
• 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.