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AP Economics. Mr. Bernstein Module 1: The Study of Economics September 10, 2013. AP Economics Mr. Bernstein. Resources are Scarce Land Labor Capital Entrepreneurship or Human Capital Scarcity implies choices must be made by individuals, corporations or societies

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ap economics

AP Economics

Mr. Bernstein

Module 1: The Study of Economics

September 10, 2013

ap economics mr bernstein
AP EconomicsMr. Bernstein

Resources are Scarce

  • Land
  • Labor
  • Capital
  • Entrepreneurship or Human Capital

Scarcity implies choices must be made by individuals, corporations or societies

  • Example: Building a dam…or fracking
ap economics mr bernstein1
AP EconomicsMr. Bernstein

Opportunity Cost

  • The Real Cost of Something Is What You Must Give Up to Get It
  • Example: Buy a new phone for $200, but now cannot buy new shoes
  • Economic costs are $200 PLUS the enjoyment of wearing new shoes, which you now can’t do
  • Opportunity costs are implicit, not explicit
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AP EconomicsMr. Bernstein

The Difference between Micro and Macro

  • Microeconomics focuses on choices made by individuals, households, or firms—the smaller parts that make up the economy as a whole.
  • Macroeconomics focuses on economic aggregates—economic measures such as the unemployment rate, the inflation rate, and gross domestic product—that summarize data across many different markets. Macroeconomics focuses on the bigger picture.
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AP EconomicsMr. Bernstein

Positive vs Normative Economics

  • Positive economics: Analysis used to determine how the world works; no judgments applied…”what is” or “what will be”
  • Normative economics: How the world should be; may involve value judgments on right and wrong
  • Examples: “It is 80 degrees in here” vs. “It’s too hot in here”
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AP EconomicsMr. Bernstein

When and Why Economists Disagree

  • Economists may disagree because they have different values or opinions
  • Economists may disagree because they use different models or methods to conduct their analysis
  • Over time, disputes in economics are resolved by the accumulation of evidence (but this can sometimes take a long time!)