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Companies common to most fire departments include Students should include five of the following : 1 Engine company:An engine company is responsible for securing a water source, deploying handlines, conducting search-and-rescue Texas Drivers Ed for Adults Sharing the Road with Others. Module 4: Topic 1. Economists generally believe that production possibilities frontiers often have this bowed-out shape because some resources are better suited to the production of cars than computers and vice versa.
Be aware that students often have trouble understanding why opportunity costs rise as the production of a good increases. You may want to use several specific examples of resources that are more suited to producing cars than computers e. The production possibilities frontier can shift if resource availability or technology changes.
Economic growth can be illustrated by an outward shift of the production possibilities frontier. This reinforces the idea of opportunity cost, and allows them to see how opportunity cost can be measured by the slope. Also, it will introduce students to the use of straight-line production possibilities frontiers which appear in Chapter 3. However, be careful if you choose to do this as students often find the difference between straight-line and concave production possibilities frontiers challenging.
He spends his entire allowance on two goods: Students should be asked to calculate the opportunity cost of one movie and the opportunity cost of one ice cream cone. It should be noted that the slope is equal to the opportunity cost and is constant because the opportunity cost is constant.
Microeconomics and Macroeconomics 1. Economics is studied on various levels. Definition of microeconomics: Definition of macroeconomics: Microeconomics and macroeconomics are closely intertwined because changes in the overall economy arise from the decisions of individual households and firms.
Because microeconomics and macroeconomics address different questions, each field has its own set of models which are often taught in separate courses.
The Economist as Policy Adviser A. Example of a discussion of minimum-wage laws: Definition of positive statements: Definition of normative statements: Positive statements can be evaluated by examining data, while normative statements involve personal viewpoints. Positive views about how the world works affect normative views about which policies are desirable.
Use several examples to illustrate the differences between positive and normative statements and stimulate classroom discussion. Possible examples include the minimum wage, budget deficits, tobacco taxes, legalization of marijuana, and seat- belt laws. Have students bring in newspaper articles and in groups, identify each statement in an editorial paragraph as being a positive or normative statement.
Discuss the differences among news stories, editorials, and blogs and the analogy to economists as scientists and as policy advisers. Much of economics is positive; it tries to explain how the economy works. But those who use economics often have goals that are normative. They want to understand how to improve the economy. Economists in Washington 1. Economists are aware that trade-offs are involved in most policy decisions. The president receives advice from the Council of Economic Advisers created in Economists are also employed by administrative departments within the various federal agencies such as the Office of Management and Budget, the Department of Treasury, the Department of Labor, the Congressional Budget Office, and the Federal Reserve.
The research and writings of economists can also indirectly affect public policy.
The process by which economic policy is made differs from the idealized policy process assumed in textbooks. Economists offer crucial input into the policy process, but their advice is only part of the advice received by policymakers. Why Economists Disagree A. Economists may disagree about the validity of alternative positive theories or about the size of the effects of changes in the economy on the behavior of households and firms. However, other economists feel that the change in the tax system would have little effect on saving behavior and therefore do not support the change.
Differences in Values C. Perception versus Reality 1. While it seems as if economists do not agree on much, this is in fact not true. Table 1 contains 20 propositions that are endorsed by a majority of economists. Table 1 2. Almost all economists believe that rent control adversely affects the availability and quality of housing. Most economists also oppose barriers to trade.
Ask the Experts: Ticket Resale 1. In this case, ask students their opinion on ticket scalping laws. Discuss the opportunity for potential audience members to pay a price higher than the stated ticket price to be able to attend the event rather than be excluded from the event because there are no more tickets available at the stated ticket price.
In the News: Why You Should Study Economics 1. Training in economics helps us to understand fallacies and to anticipate unintended consequences. This excerpt from a commencement address by Robert D. McTeer, Jr. A Brief Review Many instructors may be unaware of how much trouble beginning students have grasping the most basic graphs.
It is important for instructors to make sure that students are comfortable with these techniques. Pie Chart 2. Bar Graph 3. Time-Series Graph B. Graphs of Two Variables: The Coordinate System Figure A-2 1. Economists are often concerned with relationships between two or more variables.
Ordered pairs of numbers can be graphed on a two-dimensional grid.
The first number in the ordered pair is the x-coordinate and tells us the horizontal location of the point. The second number in the ordered pair is the y-coordinate and tells us the vertical location of the point. The point with both an x-coordinate and y-coordinate of zero is called the origin.
Two variables that increase or decrease together have a positive correlation. Two variables that move in opposite directions one increases when the other decreases have a negative correlation. Curves in the Coordinate System 1. Often, economists want to show how one variable affects another, holding all other variables constant.
Table A-1 Figure A-3 a. An example of this is a demand curve. The demand curve shows how the quantity of a good a consumer wants to download varies as its price varies, holding everything else such as income constant.
If income does change, this will alter the amount of a good that the consumer wants to download at any given price. Thus, the relationship between price and quantity desired has changed and must be represented as a new demand curve. A simple way to tell if it is necessary to shift the curve is to look at the axes. When a variable that is not named on either axis changes, the curve shifts.
Slope Figure A-5 1. We may want to ask how strongly a consumer reacts if the price of a product changes. If the demand curve is very steep, the quantity desired does not change much in response to a change in price. If the demand curve is very flat, the quantity desired changes a great deal when the price changes. A small slope in absolute value means that the demand curve is relatively flat; a large slope in absolute value means that the demand curve is relatively steep.
Cause and Effect 1. Economists often make statements suggesting that a change in Variable A causes a change in Variable B. Ideally, we would like to see how changes in Variable A affect Variable B, holding all other variables constant. This is not always possible and could lead to a problem caused by omitted variables.
Figure A-6 a. But, if Variable C has also changed, it is entirely possible that Variable C is responsible for the change in Variable B. Another problem is reverse causality. However, it is entirely possible that the change in Variable B led to the change in Variable A. It is not always as simple as determining which variable changed first because individuals often change their behavior in response to a change in their expectations about the future.
There are two very good examples in the text that you should use in class. To discuss the omitted variable problem, point out to students that a rise in the sales of cigarette lighters is positively related to the number of individuals diagnosed with lung cancer. To discuss reverse causality, show that an increase in minivan sales is followed by an increase in birth rates. Quick Quizzes 1. Economics is like a science because economists devise theories, collect data, and analyze the data in an attempt to verify or refute their theories.
In other words, economics is based on the scientific method. Figure 1 shows the production possibilities frontier for a society that produces food and clothing. Point A is an efficient point on the frontier , point B is an inefficient point inside the frontier , and point C is an infeasible point outside the frontier.
Figure 1 The effects of a drought are shown in Figure 2. The drought reduces the amount of food that can be produced, shifting the production possibilities frontier inward.
Figure 2 Microeconomics is the study of how households and firms make decisions and how they interact in markets. Macroeconomics is the study of economy-wide phenomena, including inflation, unemployment, and economic growth. Many other examples are possible. Many other answers are possible. Economic advisers to the president might disagree about a question of policy because of differences in scientific judgments or differences in values.
Chapter Quick Quiz 1. Economics is a science because economists use the scientific method. Economists use theory and observation like other scientists, but they are limited in their ability to run controlled experiments.
Instead, they must rely on natural experiments. Economists make assumptions to simplify problems without substantially affecting the answer.
Assumptions can make the world easier to understand. An economic model cannot describe reality exactly because it would be too complicated to understand. A model is a simplification that allows the economist to see what is truly important.
There are many possible answers. There are many possible answers, including interactions involving government or international trade. Figure 3 shows a production possibilities frontier between milk and cookies PPF1. If a disease kills half of the economy's cow population, less milk production is possible, so the PPF shifts inward PPF2.
Note that if the economy produces all cookies, it does not need any cows and production is unaffected. But if the economy produces any milk at all, then there will be less production possible after the disease hits.
Figure 3 7. An outcome is efficient if the economy is getting all it can from the scarce resources it has available. In terms of the production possibilities frontier, an efficient point is a point on the frontier, such as point A in Figure 4.
When the economy is using its resources efficiently, it cannot increase the production of one good without reducing the production of the other. A point inside the frontier, such as point B, is inefficient since more of one good could be produced without reducing the production of another good. The two subfields in economics are microeconomics and macroeconomics. Microeconomics is the study of how households and firms make decisions and how they interact in specific markets.
Positive statements are descriptive and make a claim about how the world is, while normative statements are prescriptive and make a claim about how the world ought to be. Here is an example.
A rapid growth rate of money is the cause of inflation. The government should keep the growth rate of money low.