eBooks Search Include Read Aloud for titles that can be read aloud.


Chapter 1 Economics Defined

Telling Teachers about these free learning materials
and our site http://www.textbooksfree.org/ might help lower the cost of textbooks.

Free Stuff
For Students

Editors Notes
Math Review is a short review of basic dynamic math skills for economics from R. Larry Reynolds 
          of Boise State.

. Our Current Events Internet Library has an interesting economics section.

 I. Basic Terms
A. Economics is the social science concerned with the use of scarce resources like land and labor
          to fulfill unlimited human wants.
     B. Resources are the inputs, want satisfaction is the output
     C. Key Concepts
         1. Scarcity of resources results in the need for choices by participants.
         2  Participants, buyers and sellers, exhibit purposeful behavior to enhance their own rational self interest.
         3. Marginal analysis where the change in benefit received is balanced with the change in cost is a common
             purposeful behavior.
         4. Fallacy of composition applying to the whole that which is true for a part without adequate proof. 1 and 3
             are odd numbers, so four is odd number. 
     D. Economic methodology 
          1. Positive economics 
              a. What something is 
              b. Objective, can be measured
              c. Example: measuring disposable personal income which is an individual's salary after taxes
          2. Normative economics
              a. What something ought to be 
              b. Subjective, difficult to measure 
              c. Requires value judgments by citizens, Political Action Committees (PAC's), politicians, economists, etc.
              d. Examples: should the minimum wage be increased, should defense spending increase and social 
                 spending be lowered
        3. Descriptive Economics
            a. Looking at the real-world to develop Economic Theory
            b. Economic Theory
                1. Generalizations concerning economic behavior based upon real-world observations, empirical by nature
                2. Economic theories are objective "positive economics"
                3. Assumes behavior is rational and economic (self-serving)
                4. Example: as the price of a product increases, consumers tend to buy less
            c. Economic Policy
                1. Application of economic theory to solve economic problems
                2. Economic policies are subjective, "normative economics".
                3. How society makes economic choices such as in the 1980's when
                    a. spending for the elderly (Social Security) increased 
                    b. spending for children (Head Start) decreased 1234

Free Internet Libraries improve grades and careers.  

eBooks.com - Cut book expenses by half 

Free Stuff For Students

Free Internet Libraries improve grades and careers.


   E.  Economic Model
1. A simplified representation of real-world economic activity
        2. Requires Ceteris Paribus: Latin for holding other economic variables constant
        3. Models may be quantities or qualitative  
Three Pitfalls to model analysis 
a. 3.1 Restrictive, unrealistic assumptions 
b. 3.2 Omitted details  
c.  3.3 Are economic models falsifiable?
d. Are economic models falsifiable?
5. Models such as the Production Possibility Curve chapter 2 and supply and demand, chapter 3, explained
          in the next chapter provide a simplified description of how some aspect of an economy works.
 G. Sundry Materials
1. Economics Glossary from Amosweb
 2. Economics The Library of Economics and Liberty has a concise economics Encyclopedia at the 
          bottom of the page.
3. Our Economics Learning Center has information for students, teachers, an professionals
4.  Video Review 9.08 Video
. Outside Reading
          a. Is economics a science?  
          b. Economics is more like history than physics

II. Economic goals of the United States
 A. Economic growth
     B. Full employment of all economic resources
     C. Price stability (low inflation)
     D. Positive balance of payments (international flow of dollars)
     E. Economic freedom
     F. Equitable distribution of income
    G. Economic security (if you have A through F, you have G)
Economic Report of the President gives the President's view on achieving these goals.

Telling Teachers about these free learning materials
and our site http://www.textbooksfree.org/ might help lower the cost of textbooks.


III. The study of economics is divided into two disciplines.

Macroeconomics1is the study of  total economic activity.

Microeconomics2  is the study of 
individual segments of the economy.

Macro Activity Complementary Micro Activity
1. Inflation rate 1. A product's price
2. Economic growth 2. Pollution
3. Total employment 3. Poverty
4. The  business cycle 4. A competitive market
2012 AP Econ Videos- This is Macro  
1  Wiki explanation is extensive, for now, 
the first few paragraphs are sufficient.

2 Wiki explanation is extensive, for now, the first paragraph is sufficient.

Chapter 1 Class  Discussion Questions

Free Stuff For Students

Free Internet Libraries  
improve grades and careers.

Chapter 1 Homework Questions

Next Chapter  Economizing Scarce Resources   

Table of Contents

Economics Internet Library