View by Category

Loading...

PPT – Microeconomics PowerPoint presentation | free to view

The Adobe Flash plugin is needed to view this content

About This Presentation

Write a Comment

User Comments (0)

Transcript and Presenter's Notes

Microeconomics

- Fall 2007

Scarcity and Social Choice

- The problem for society is a scarcity of

resources - Labor
- Capital
- Human capital
- Physical Capital
- Land/natural resources
- Entrepreneurship
- Technology

Coordination in Economics three big Problems

- Any economic system must solve three coordination

problems - What, and how much, to produce.
- How to produce it.
- For whom to produce it.

- Economics Reasoning
- People are rational
- People respond to Economic Incentives
- Optimal Decisions are made at margins

Invisible hand theory

Adam Smith

1776 book An Inquiry into the Nature and Causes

of the wealth of Nations

The Invisible Hand Theory

- Price has a tendency to fall when the quantity

supplied is greater than the quantity demanded. - Price has a tendency to rise when the quantity

demanded is greater than the quantity supplied.

- Microeconomics
- is the study of individual choice, and how that

choice is influenced by economic forces - Macroeconomics
- Study of the economy as a whole

Positive economics vs. Normative economics

- Positive economics
- A statement can be tested, proven or proven

false. - The scientific study of what is among economic

matters. - A positive economics can be true or false.

- Normative economics
- Judgments about what ought to be in economic

matters. - Cannot be proved false, because they are based on

opinion. - A normative economics can be true or false.

Economists Fight

- "Economics is the only field in which two people

can share a Nobel Prize for saying opposing

things." - Specifically, Myrdal and Hayek shared one.

- 18981987, Swedish economist, sociologist, and

public official - His wife, Alva Myrdal won the Nobel Peace Prize

in 1982.

- Friedrich von Hayek born May 8, 1899, Vienna,

Austriadied March 23, 1992, Freiburg, Germany

Why Economists Disagree

- In some cases, the disagreement may be positive

in nature because - Our knowledge of the economy is imperfect
- Certain facts are in dispute
- In most cases, the disagreement is normative in

nature because - While the facts may not be in dispute
- Differing values of economists lead them to

dissimilar conclusions about what should be done

Economists disagree

The Methods of Economics

- Economics relies heavily on modeling
- Economic theories must have a well-constructed

model - While most models are physical constructs
- Economists use words, diagrams, and mathematical

statements

Economic Models

- "Economists do it with models"
- What is a model?
- Abstract representation of reality

Economics

Clever faces

- )
- ? ?
- (
- ? ?

More

- -Q

More

- O-)

More

- Q-)

More

- O

More

- C-)

More

- d-)

More

- -)

More

- 5-)

More

- -.)

More

- ltO)

More

- -B

More

- )-)

More

- lt-(

More

- -

Example on model

- A map is a model.
- If your purpose is to find the best way to drive

from Lexington to Cincinnati. - A highway map is needed
- If you purpose is to find how to get to Keeneland

from B.E. building - A city map is needed

The Art of Building Economic Models

- Guiding principle of economic model building
- Should be as simple as possible to accomplish its

purpose - Level of detail that would be just right for one

purpose will usually be too much or too little

for another - Even complex models are built around a simple

framework

Assumptions and Conclusions

- Types of assumptions in an economic model
- Simplifying assumptions
- Way of making a model simpler without affecting

any of its important conclusions - Critical assumptions
- Affect conclusions of a model in important ways
- If critical assumptions are wrong model will be

wrong - All economic models have one or more critical

assumptions

GRAPHISH THE LANGUAGE OF GRAPHS

Presenting Information Visually

(a) Line graph

(c) Pie chart

(b) Bar graph

(No Transcript)

Graphing A brief review

- Variables a quantity that is free to take a

range of different values. E.g. Xs and Ys - Functions (Equations) a mathematical expression

that describes the relationship between two or

more variables. - Yf(X)
- Y is a function of X
- Y dependent (endogenous) variable
- a variable in an equation whose value is

determined by the value taken by another variable

in the equation - X independent (exogenous) variable.
- a variable in an equation whose value determines

the value taken by another variable in the

equation - Constant (parameter) a quantity that is fixed

in value

Number Lines

40

30

20

B

10

A

0

- 3

- 2

- 10

- 20

Horizontal number line

- 30

- 40

Vertical number line

Coordinate Geometry

Y

4 3 2 1

(X, Y)

X

-4 -3 -2 -1 1 2 3 4

O

-1 -2

Coordinate Geometry

- The figure above shows the (rectangular)

coordinate plane. The horizontal line is called

the x-axis and the perpendicular vertical line is

called the y-axis. The point at which these two

axes intersect, designated O, is called the

origin. The axes divide the plane into four

quadrants. 1,2 ,3 and 4, as shown.

Coordinate Geometry

- Each point in the plane has an x-coordinate and a

y-coordinate. A point is identified by an ordered

pair (x, y) of numbers in which the x-coordinate

is the first number and the y-coordinate is the

second number. - (4,5) means that the point is 4 units to the

right of the y-axis ( that is x4) and 5 units

above the x-axis ( that is y5). The origin has

coordinates (0,0)

Coordinate System

40

30

B

(1, 20)

20

A

10

(4, 5)

0

1

2 3

4

5

From Table to Graph

Quantity of pens

3.00

2.50

2.00

Price of pens (in dollars)

1.50

1.00

.50

0

1 2 3 4 5 6 7 8

Quantity of pens bought

Linear and Nonlinear Curves

6

5

4

Price (in dollars)

Price (in dollars)

3

2

1

0

10

20

30

40

Quantity

Quantity

Linear Curve

Nonlinear Curve

Linear Equation

- Linear Equations
- Y a bX
- a is called vertical intercept, it determines the

graph position. - b is called the slope. It can be positive,

negative or 0.

Slope

- Y a bX
- Slope (straight-Line Graphs)
- tells how much Y will change every time X changes

by one unit - slope of a straight line
- change in vertical variable/change in

horizontal variable. - rise / run ?Y/ ?X

Example telephone bills

- Let Ycost of an international phone call
- Let Xlength of call in minutes
- 2 initial connection fee
- 50 cents per minute
- functional relationship between X and Y
- Y f(x) 2 .5 X

From Table to Graph

Quantity of pens

3.00

2.50

2.00

Price of pens (in dollars)

1.50

1.00

.50

0

1 2 3 4 5 6 7 8

Quantity of pens bought

Slopes of Curves

c

10

Slope 1

9

d

Rise 1

A

8

Slope 4

Run 1

Slope - 4

7

Rise 4

6

Rise - 4

5

B

4

Run 1

Run 1

e

Slope -0.5

3

L

a

Rise -1

2

Slope 1

Run 2

E

b

1

Rise 1

e

Run 1

0

1 2 3 4 5 6

7 8 9 10 11

Positive relationship v.s. Negative relationship

- Suppose YGPA
- Xnumber of hours spent

studying per week - As X increases, what do you expect to happen to

Y? - As X increases, Y increases.
- positive (or direct) relationship
- Suppose YGPA
- Xnumber of hours spent

watching TV - As X increases, what do you expect to happen to

Y? - As X increases, Y decreases.
- negative (or indirect) relationship

Inverse and Direct Relationships

positive relationship When X goes up, Y goes

up When X goes down, Y goes down

negative relationship When X goes up, Y goes

down When X goes down, Y goes up

X

X

Y

Y

- Y 2 0.5 X

Solve for the linear equation

- Step (1) Pick any two points.
- (X2,Y2) (1, 2.5) (X1,Y1) (0, 2)
- Step (2) Plug into formula
- slope ?Y/?X
- (Y2 - Y1)/(X2 - X1)
- (2.5 2)/(1 0)
- .5/1
- .5
- INTERPRETING THE SLOPE
- Slope tell us what happens to Y as X increases by

ONE unit. - Equation of a line Y a bX ? Y a .5X
- Substituting any point value, say, (0, 2) ?2 a

.5 x 0 ?a2 - So, Y 2 .5 X

Example on advertising and sales

Table A.1 Advertising and Sales at Len Harrys

Example on advertising and sales

Solve for the straight line function

- First, calculating slope
- Step 1, pick up 2 points
- (X1,Y1)(2,46), (X2,Y2)( 6,58)
- Step 2, plug into formula
- Slope (Y2 - Y1)/ (X2 X1)
- (58-46)/(6-2)
- 12 / 4
- 3
- b
- So Y a 3X, plug in any point value for X

and Y. e.g. (2,46) - 46 a 3x2,
- So a 46 6 40,
- And Y 40 3X

About PowerShow.com

PowerShow.com is a leading presentation/slideshow sharing website. Whether your application is business, how-to, education, medicine, school, church, sales, marketing, online training or just for fun, PowerShow.com is a great resource. And, best of all, most of its cool features are free and easy to use.

You can use PowerShow.com to find and download example online PowerPoint ppt presentations on just about any topic you can imagine so you can learn how to improve your own slides and presentations for free. Or use it to find and download high-quality how-to PowerPoint ppt presentations with illustrated or animated slides that will teach you how to do something new, also for free. Or use it to upload your own PowerPoint slides so you can share them with your teachers, class, students, bosses, employees, customers, potential investors or the world. Or use it to create really cool photo slideshows - with 2D and 3D transitions, animation, and your choice of music - that you can share with your Facebook friends or Google+ circles. That's all free as well!

For a small fee you can get the industry's best online privacy or publicly promote your presentations and slide shows with top rankings. But aside from that it's free. We'll even convert your presentations and slide shows into the universal Flash format with all their original multimedia glory, including animation, 2D and 3D transition effects, embedded music or other audio, or even video embedded in slides. All for free. Most of the presentations and slideshows on PowerShow.com are free to view, many are even free to download. (You can choose whether to allow people to download your original PowerPoint presentations and photo slideshows for a fee or free or not at all.) Check out PowerShow.com today - for FREE. There is truly something for everyone!

You can use PowerShow.com to find and download example online PowerPoint ppt presentations on just about any topic you can imagine so you can learn how to improve your own slides and presentations for free. Or use it to find and download high-quality how-to PowerPoint ppt presentations with illustrated or animated slides that will teach you how to do something new, also for free. Or use it to upload your own PowerPoint slides so you can share them with your teachers, class, students, bosses, employees, customers, potential investors or the world. Or use it to create really cool photo slideshows - with 2D and 3D transitions, animation, and your choice of music - that you can share with your Facebook friends or Google+ circles. That's all free as well!

For a small fee you can get the industry's best online privacy or publicly promote your presentations and slide shows with top rankings. But aside from that it's free. We'll even convert your presentations and slide shows into the universal Flash format with all their original multimedia glory, including animation, 2D and 3D transition effects, embedded music or other audio, or even video embedded in slides. All for free. Most of the presentations and slideshows on PowerShow.com are free to view, many are even free to download. (You can choose whether to allow people to download your original PowerPoint presentations and photo slideshows for a fee or free or not at all.) Check out PowerShow.com today - for FREE. There is truly something for everyone!

presentations for free. Or use it to find and download high-quality how-to PowerPoint ppt presentations with illustrated or animated slides that will teach you how to do something new, also for free. Or use it to upload your own PowerPoint slides so you can share them with your teachers, class, students, bosses, employees, customers, potential investors or the world. Or use it to create really cool photo slideshows - with 2D and 3D transitions, animation, and your choice of music - that you can share with your Facebook friends or Google+ circles. That's all free as well!

For a small fee you can get the industry's best online privacy or publicly promote your presentations and slide shows with top rankings. But aside from that it's free. We'll even convert your presentations and slide shows into the universal Flash format with all their original multimedia glory, including animation, 2D and 3D transition effects, embedded music or other audio, or even video embedded in slides. All for free. Most of the presentations and slideshows on PowerShow.com are free to view, many are even free to download. (You can choose whether to allow people to download your original PowerPoint presentations and photo slideshows for a fee or free or not at all.) Check out PowerShow.com today - for FREE. There is truly something for everyone!

For a small fee you can get the industry's best online privacy or publicly promote your presentations and slide shows with top rankings. But aside from that it's free. We'll even convert your presentations and slide shows into the universal Flash format with all their original multimedia glory, including animation, 2D and 3D transition effects, embedded music or other audio, or even video embedded in slides. All for free. Most of the presentations and slideshows on PowerShow.com are free to view, many are even free to download. (You can choose whether to allow people to download your original PowerPoint presentations and photo slideshows for a fee or free or not at all.) Check out PowerShow.com today - for FREE. There is truly something for everyone!

Recommended

«

/ »

Page of

«

/ »

Promoted Presentations

Related Presentations

Page of

Page of

CrystalGraphics Sales Tel: (800) 394-0700 x 1 or Send an email

Home About Us Terms and Conditions Privacy Policy Contact Us Send Us Feedback

Copyright 2015 CrystalGraphics, Inc. — All rights Reserved. PowerShow.com is a trademark of CrystalGraphics, Inc.

Copyright 2015 CrystalGraphics, Inc. — All rights Reserved. PowerShow.com is a trademark of CrystalGraphics, Inc.

The PowerPoint PPT presentation: "Microeconomics" is the property of its rightful owner.

Do you have PowerPoint slides to share? If so, share your PPT presentation slides online with PowerShow.com. It's FREE!

Committed to assisting Uky University and other schools with their online training by sharing educational presentations for free