Chap-02Thinking-Like-an-Economist(曼昆微观经济学-江西财大-王秋石

ThinkingLikeanEconomistChapter2EveryfieldofstudyhasitsownterminologyMathematicsaxiomsintegralsvectorspacesPsychologyegoidcognitivedissonanceLawtortsvenuesPromissoryestoppelEveryfieldofstudyhasitsownterminologyEconomicsSupplyDemandElasticityConsumerSurplusComparativeadvantageOpportunitycostDeadweightlossEconomicstrainsyouto....Thinkintermsofalternatives.Evaluatethecostofindividualandsocialchoices.Examineandunderstandhowcertaineventsandissuesarerelated.TheEconomistasaScientistTheeconomicwayofthinking...Involvesthinkinganalyticallyandobjectively.Makesuseofthescientificmethod.TheScientificMethodUsesabstractmodelstohelpexplainhowacomplex,realworldoperates.Developstheories,collects,andanalyzesdatatoprovethetheories.Observation,TheoryandMoreObservation!TheRoleofAssumptionsEconomistsmakeassumptionsinordertomaketheworldeasiertounderstand.Theartinscientificthinkingisdecidingwhichassumptionstomake.Economistsusedifferentassumptionstoanswerdifferentquestions.TheEconomicWayofThinkingIncludesdevelopingabstractmodelsfromtheoriesandtheanalysisofthemodels.Usestwoapproaches:Descriptive(reportingfacts,etc.)Analytical(abstractreasoning)EconomicModelsEconomistsusemodelstosimplifyrealityinordertoimproveourunderstandingoftheworldTwoofthemostbasiceconomicmodelsinclude:TheCircularFlowModelTheProductionPossibilitiesFrontierTheCircular-FlowModelThecircular-flowmodelisasimplewaytovisuallyshowtheeconomictransactionsthatoccurbetweenhouseholdsandfirmsintheeconomy.TheCircular-FlowDiagramFirmsHouseholdsMarketforFactorsofProductionMarketforGoodsandServicesSpendingRevenueWages,rent,andprofitIncomeGoods&ServicessoldGoods&ServicesboughtLabor,land,andcapitalInputsforproductionTheCircular-FlowDiagramHouseholdsBuyandconsumegoodsandservicesOwnandsellfactorsofproductionFirmsProduceandsellgoodsandservicesHireandusefactorsofproductionTheCircular-FlowDiagramMarketsforFactorsofProductionHouseholdssellFirmsbuyMarketsforGoods&ServicesFirmssellHouseholdsbuyTheCircular-FlowDiagramFactorsofProductionInputsusedtoproducegoodsandservicesLand,labor,andcapitalTheProductionPossibilitiesFrontierTheproductionpossibilitiesfrontierisagraphshowingthevariouscombinationsofoutputthattheeconomycanpossiblyproducegiventheavailablefactorsofproductionandtechnology.TheProductionPossibilitiesFrontierQuantityofComputersProducedQuantityofCarsProduced3,00001,0002,0007001,000300AB2,200600CDTheProductionPossibilitiesFrontierQuantityofComputersProducedQuantityofCarsProduced3,0001,0002,0002,200A70060030001,000BCDProductionpossibilitiesfrontierConceptsIllustratedbytheProductionPossibilitiesFrontierEfficiencyTradeoffsOpportunityCostEconomicGrowth4,000TheProductionPossibilitiesFrontierQuantityofComputersProducedQuantityofCarsProduced3,0002,000A70001,000E2,100750AnoutwardshiftintheproductionpossibilitiesfrontierMicroeconomicsandMacroeconomicsMicroeconomicsfocusesontheindividualpartsoftheeconomy.HowhouseholdsandfirmsmakedecisionsandhowtheyinteractinspecificmarketsMacroeconomicslooksattheeconomyasawhole.Howthemarkets,asawhole,interactatthenationallevel.TwoRolesofEconomistsWhentheyaretryingtoexplaintheworld,theyarescientists.Whentheyaretryingtochangetheworld,theyarepolicymakers.PositiveversusNormativeAnalysisPositivestatementsarestatementsthatdescribetheworldasitis.CalleddescriptiveanalysisNormativestatementsarestatementsabouthowtheworldshouldbe.Calledprescriptiveanalysis??PositiveorNormativeStatements?Anincreaseintheminimumwagewillcauseadecreaseinemploymentamongtheleast-skilled.???PositiveorNormativeStatements?Higherfederalbudgetdeficitswillcauseinterestratestoincrease.????PositiveorNormativeStatements?Theincomegainsfromahigherminimumwageareworthmorethananyslightreductionsinemployment.???PositiveorNormativeStatements?Stategovernmentsshouldbeallowedtocollectfromtobaccocompaniesthecostsoftreatingsmoking-relatedillnessesamongthepoor.EconomistsinWashington......serveasadvisersinthepolicymakingprocessofthethreebranchesofgovernment:LegislativeExecutiveJudicialWhyEconomistsDisagreeTheymaydisagreeontheoriesabouthowtheworldworks.Theymayholddifferentvaluesand,thus,differentnormativeviews.ExamplesofWhatMostEconomistsAgreeOnAceilingonrentsreducesthequantityandqualityofhousingavailable.Tariffsandimportquotasusuallyreducegeneraleconomicwelfare.SummaryInordertoaddresssubjectswithobjectivity,economicsmakesuseofthescientificmethod.Thefieldofeconomicsisdividedintotwosubfields:microeconomicsandmacroeconomics.SummaryEconomicsreliesonbothpositiveandnormativeanalysis.Positivestatementsasserthowtheworld“is”whilenormativestatementsasserthowtheworld“shouldbe.”Economistsmayofferconflictingadviceduetodifferencesinscientificjudgmentsortodifferencesinvalues.GraphicalReviewTheCircular-FlowDiagramFirmsHouseholdsMarketforFactorsofProductionMarketforGoodsandServicesSpendingRevenueWages,rent,andprofitIncomeLabor,land,andcapitalInputsforproductionGoods&ServicessoldGoods&ServicesboughtTheProductionPossibilitiesFrontierQuantityofComputersProducedQuantityofCarsProduced3,00001,