s Thinking Like an Economist Chapter 2 Copyright o 2001 by Harcourt, Inc All rights reserved. Requests for permission to make copies of any part of the work should be mailed to Permissions Department, Harcourt College Publishers 6277 Sea harbor Drive. Orlando Florida 32887-6777
Thinking Like an Economist Chapter 2 Copyright © 2001 by Harcourt, Inc. All rights reserved. Requests for permission to make copies of any part of the work should be mailed to: Permissions Department, Harcourt College Publishers, 6277 Sea Harbor Drive, Orlando, Florida 32887-6777
Every field of study has its own terminology Mathematics integrals axioms Psychology vector spaces ego ognitive aw dissonance torts proMissory estoppel venues Harcourt, Inc. items and derived items copyright o 200l by harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Every field of study has its own terminology Mathematics axioms integrals vector spaces Psychology ego id cognitive Law dissonance torts venues Promissory estoppel
Every field of study has its own terminology Economics Supply Opportunity Elasticity cost Comparative Consumer Surplus advantage Deadweight Demand loss Harcourt, Inc. items and derived items copyright o 200l by harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Every field of study has its own terminology Economics Supply Demand Elasticity Consumer Surplus Comparative advantage Opportunity cost 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 Harcourt, Inc. items and derived items copyright o 200l by harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. 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 Harcourt, Inc. items and derived items copyright o 200l by harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. 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 prove the theories Observation, Theory and More observation! Harcourt, Inc. items and derived items copyright o 200l by harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. The Scientific Method Uses abstract models to help explain how a complex, real world operates. Develops theories, collects, and analyzes data to prove the theories. Observation, Theory and More Observation!
The Role of assumptions Economists make assumptions in order to make the world easier to understand The art in scientific thinking is deciding which assumptions to make Economists use different assumptions to answer dififerent questions Harcourt, Inc. items and derived items copyright o 200l by harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. The Role of Assumptions Economists make assumptions in order to make the world easier to understand. The art in scientific thinking is deciding which assumptions to make. Economists use different assumptions to answer different questions
The Economic Way of Thinking Includes developing abstract models from theories and the analysis of the models Uses two approaches Descriptive(reporting facts, etc.) Analytical(abstract reasoning) Harcourt, Inc. items and derived items copyright o 200l by harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. The Economic Way of Thinking Includes developing abstract models from theories and the analysis of the models. Uses two approaches: Descriptive (reporting facts, etc.) Analytical (abstract reasoning)
Economic Models Economists use models to simplify reality in order to improve our understanding of the world TTwo of the most basic economic models include The circular Flow model The production possibilities frontier Harcourt, Inc. items and derived items copyright o 200l by harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Economic Models Economists use models to simplify reality in order to improve our understanding of the world Two of the most basic economic models include: The Circular Flow Model The Production Possibilities Frontier
The circular-Flow Model TThe circular-fow model is a simple way to visually show the economic transactions that occur between households and firms in the economy. Harcourt, Inc. items and derived items copyright o 200l by harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. The Circular-Flow Model The circular-flow model is a simple way to visually show the economic transactions that occur between households and firms in the economy
