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Chapter 1 What is Economics About. Appendix A. Working with Diagrams. Types of Relationships between variables. Direct Positive Inverse Negative No Relationship Variables are independent. Two-Variable Diagram Representing an Inverse Relationship.

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Chapter 1 what is economics about
Chapter 1 What is Economics About


Appendix a

Appendix A

Working with Diagrams


Types of relationships between variables
Types of Relationships between variables

  • Direct

    • Positive

  • Inverse

    • Negative

  • No Relationship

    • Variables are independent





Slope
Slope Variables

  • Used to see how a variable changes in response to another variable changing


To calculate slope
To calculate slope Variables

  • Find two points on any straight line


What sign do you expect the slope to have
What sign do you expect the slope to have? Variables

  • Direct relationship

    • Positive

  • Inverse relationship

    • Negative

  • No Relationship

    • 0 or infinity




The 45 line
The 45 Line Variables


Homework
Homework Variables

  • Chapter 1

    • Questions 4, 5, 7, 8

  • Chapter 1 Appendix

    • Questions 6, 7, 9


In class exercise 1

In-class exercise 1 Variables

Do we understand Chapter 1?


Appendix b

Appendix B Variables

Should you major in Economics??


Five myths about economics and an economics major
Five myths about economics and an economics major Variables

  • Economics is all mathematics and statistics

  • Economics is only about inflation, interest rates, unemployment, and other such things

  • People become economists only if they want to “make money”

  • Economics wasn’t very interesting in high school, so it isn’t going to be interesting now

  • Economics is a lot like business, but business is more marketable


Chapter 2 economic activities producing and trading
Chapter 2 Variables Economic Activities: Producing and Trading


Efficiency
Efficiency Variables

  • Efficiency of Production is goal

  • If a firm is producing the max possible given available resources and technology


Production possibility frontier ppf
Production Possibility Frontier Variables (PPF)

  • Shows all possible combinations of goods for a particular economy at a particular point in time, given its resources and technology constraints




Where are we on the ppf
Where are we on the PPF? Variables

  • Can we be on the PPF?

    • Yes!

    • efficient

  • Can we be under the PPF?

    • Yes!

    • Inefficient

  • Can we be over the PPF?

    • NO


Two types of production possibility frontiers
Two types of Production Possibility Frontiers Variables

Constant Opportunity Costs

  • STRAIGHT LINE

  • DOWNWARD SLOPED (inverse relationship)

  • 1 to 1 relationship (slope constant)


Production possibilities frontier constant opportunity costs
Production Possibilities Frontier Variables (Constant Opportunity Costs)


Production possibilities frontier constant opportunity costs1
Production Possibilities Frontier Variables (Constant Opportunity Costs)


Second type of ppf
Second Type of PPF Variables

Changing Opportunity Costs

  • BOWED OUT PPF

  • Real world PPF

  • Changing slope with every point


Production possibilities frontier changing opportunity costs
Production Possibilities Frontier Variables (Changing Opportunity Costs)



Law of increasing opportunity costs
Law of Increasing Opportunity Costs Costs)

  • Goes along with CHANGING OPPORTUNITY COSTS

  • As more of a good is produced the opportunity cost to produce that good increases.


A Summary Statement about Increasing Opportunity Costs and a Production Possibilities Frontier That Is Bowed Outward (Concave Downward)


Economic concepts illustrated by ppf
Economic Concepts illustrated by PPF Production Possibilities Frontier That Is Bowed Outward (Concave Downward)

  • Scarcity

  • Choice

  • Opportunity Costs

  • Law of Increasing Opportunity Costs


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