learning PRINCIPLES OF ECONOMICS(1)

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date: 2018.3.31-4.22
time: 3h

part 1 INTRODUCTION
chapter1 ten principles of economics

ECONOMICS: the society how to manage its limited resources.

How people make decision?

  1. people face trade-off
    the society also face some trade-offs: “guns and butter”, efficiency and equity(when the government tries to cut the economic pie into more equal slices, the pie gets smaller)
  2. the cost of something is waht you give you up to get it
  3. rational people think at the margin
  4. people response to incentives

How people interact?

  1. trade can make everyone better off
  2. markets are usually a good way to organize economic activity
  3. government can sometimes improve market outcomes

How the economy as a whole works?

  1. a country’s standard of living depends on its ability to produce goods and services
  2. prices rise when the government prints too much money
  3. society faces a short-run trade-off between inflation and unemployment
chapter2 thinking like an economist

as scientist

  1. the scientific method: observation, theory, and more observation
  2. assumption
    • simplify complex world
    • use different assumption in different conditions
  3. economic models[simplify the reality to improve our understanding of it]
    • circular-flow diagram
    • the production possibilities frontier
  4. microeconomics and macroeconomics

as policy adviser

  1. positive vs normative analysis
  2. economists in Washington

why economits disagree

  1. differences in scientific judgement
  2. differences in values
  3. perception vs reality
chapter3 Interdependence and the Gains from trade
  1. absolute advantage
  2. comparative advantage and trade
    conclusion: trade can make everyone better off
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