Problems and Policies (10th edition)
Brian Lyons, Pearson Prentice Hall
Text includes a Study Guide with review questions and answers at the end of each chapter.
Organization of the Course
What you need to know :
What you need to do:
A To Do list for each chapter, on SLATE
How you learn it:
main points and highlights
How you check your progress: How you are evaluated: In the text:
Adds details re: the objectives
Critical Thinking Questions after each chapter after each chapter
(with answers & feedback)
See next slide.
Chapters 7 and 9
Chapters 7 and 9-12
A typical “To Do” list for a chapter
To Do List for Chapter 1
1. Read “About Chapter 01”.
2. Read the Learning Outcomes for Chapter 1.
3. Read Chapter 1 in the text.
4. Review the PowerPoint slideshow for Chapter 1.
1. Do the self-check questions on SLATE.
2. Do the Review Questions in the text (pages 16-18); check your answers (page 345).
3. Do ‘Critical Thinking’ questions #1-5 in the text (pp.18-19); check your answers (p.345).
See the “Frequently Asked Questions” File in the Introduction and Orientation section
Today, we enjoy a high standard of living…
… whereas our greatgrandparents lived without the things we have toda
-- AND worked much longer hours!
What has made our standard of living so much highe
The Basic “Economic Problem” of Scarcity
Deserted Island Scenario:
2 products, 8 workers.
Each worker produces
1 unit of food per day or
1 unit of fuel per day.
Want 25% more food:
Basic problem of scarcity:
We lack the resources to
Produce everything that we want.
What is the cost of the extra unit of food per day?
Suppose that in an island mini-economy there were:
2 people catching a total of 6 fish per day and
2 people picking a total of 8 kilograms of fruit per day
If they decided that they wanted
3 more fish each day, what would be the opportunity cost of the additional 3 fish?
To produce 3 more fish/day
A Production-Possibilities Curve
40 of A; 0 of B
You can have more of B
40 of B; 0 of A
40 Product B
The opportunity cost of a $9,000 automobile that you are considering buying is:
$200 per month payment (principal and in on the loan that was needed to buy the car.
not a serious consideration in the decision whether to buy the car.
(d) the boat and fishing vacation that could have been bought instead of the car.
none of the above.
What is the opportunity cost of the government spending
$2 billion more on health care?
What is the opportunity cost of your attending college?
How could the islanders get 5 units of food without having to accept a reduction in fuel production from 4 units to 3 units?
The 4 food workers are producing
4 units of food/day
(1.00 units of food/worker/day)
The key is
Productivity and the Standard of Living
If the productivity of food workers increased by 25%
5 units of food are available each day instead of 4
and if the productivity of fuel workers increased by 25%
5 units of fuel are available each day instead of 4
If the productivity of workers in general increases,
is the key to a
higher standard of living