微观经济学princ-ch023-presenta.ppt

2,Thinking Like An Economist,3,Interdependence and the Gains from Trade,CHAPTER 2 THINKING LIKE AN ECONOMIST,In chapter 2, look for the answers to these questions:,What are economists two roles? How do they differ? What are models? How do economists use them? What are the elements of the Circular-Flow Diagram? What concepts does the diagram illustrate? How is the Production Possibilities Frontier related to opportunity cost? What other concepts does it illustrate? What is the difference between microeconomics and macroeconomics? Between positive and normative?,CHAPTER 3 INTERDEPENDENCE AND THE GAINS FROM TRADE,In chapter 3, look for the answers to these questions:,Why do people and nations choose to be economically interdependent? How can trade make everyone better off? What is absolute advantage? What is comparative advantage? How are these concepts similar? How are they different?,0,CHAPTER 2 THINKING LIKE AN ECONOMIST,The Economist as Scientist,Economists play two roles: Scientists: try to explain the world Policy advisors: try to improve it In the first, economists employ the scientific method, the dispassionate development and testing of theories about how the world works.,CHAPTER 2 THINKING LIKE AN ECONOMIST,Assumptions & Models,Assumptions simplify the complex world, make it easier to understand. Example: To study international trade, assume two countries and two goods. Unrealistic, but simple to learn and gives useful insights about the real world. Model: a highly simplified representation of a more complicated reality. Economists use models to study economic issues.,CHAPTER 2 THINKING LIKE AN ECONOMIST,Some Familiar Models,A road map,CHAPTER 2 THINKING LIKE AN ECONOMIST,Some Familiar Models,A model of human anatomy from high school biology class,CHAPTER 2 THINKING LIKE AN ECONOMIST,Some Familiar Models,A model airplane,CHAPTER 2 THINKING LIKE AN ECONOMIST,Our First Model: The Circular-Flow Diagram,The Circular-Flow Diagram: A visual model of the economy, shows how dollars flow through markets among households and firms. Two types of “actors”: households firms Two markets: the market for goods and services the market for “factors of production”,CHAPTER 2 THINKING LIKE AN ECONOMIST,Factors of Production,Factors of production: the resources the economy uses to produce goods & services, including labor land capital (buildings & machines used in production),CHAPTER 2 THINKING LIKE AN ECONOMIST,FIGURE 1: The Circular-Flow Diagram,Households: own the factors of production, sell/rent them to firms for income buy and consume goods & services,CHAPTER 2 THINKING LIKE AN ECONOMIST,FIGURE 1: The Circular-Flow Diagram,Households,Firms: buy/hire factors of production, use them to produce goods and services sell goods & services,CHAPTER 2 THINKING LIKE AN ECONOMIST,FIGURE 1: The Circular-Flow Diagram,CHAPTER 2 THINKING LIKE AN ECONOMIST,Our Second Model: The Production Possibilities Frontier,The Production Possibilities Frontier (PPF): A graph that shows the combinations of two goods the economy can possibly produce given the available resources and the available technology. Example: Two goods: computers and wheat One resource: labor (measured in hours) Economy has 50,000 labor hours per month available for production.,0,PPF Example,Producing one computer requires 100 hours labor. Producing one ton of wheat requires 10 hours labor.,0,CHAPTER 2 THINKING LIKE AN ECONOMIST,A,B,C,D,E,PPF Example,A C T I V E L E A R N I N G 1: Points off the PPF,A. On the graph, find the point that represents (100 computers, 3000 tons of wheat), label it F. Would it be possible for the economy to produce this combination of the two goods? Why or why not? B. Next, find the point that represents (300 computers, 3500 tons of wheat), label it G. Would it be possible for the economy to produce this combination of the two goods?,16,A C T I V E L E A R N I N G 1: Answers,17,Point F: 100 computers, 3000 tons wheat,Point F requires 40,000 hours of labor. Possible but not efficient: could get more of either good w/o sacrificing any of the other.,A C T I V E L E A R N I N G 1: Answers,18,Point G: 300 computers, 3500 tons wheat,Point G requires 65,000 hours of labor. Not possible because economy only has 50,000 hours.,CHAPTER 2 THINKING LIKE AN ECONOMIST,The PPF: What We Know So Far,Points on the PPF (like A E) possible efficient: all resources are fully utilized Points under the PPF (like F) possible not efficient: some resources underutilized (e.g., workers unemployed, factories idle) Points above the PPF (like G) not possible,CHAPTER 2 THINKING LIKE AN ECONOMIST,The PPF and Opportunity Cost,Recall: The opportunity cost of an item is what must be given up to obtain that item.,Moving along a PPF involves shifting resources (e.g., labor) from the production of one good to the other. Society faces a tradeoff: Getting more of one good requires sacrificing some of the other. The slope of the PPF tells you the opportunity cost of one good in terms of the other.,CHAPTER 2 THINKING LIKE AN ECONOMIST,The PPF and Opportunity Cost,The slope of a line equals the “rise over the run” the amount the line rises when you move to the right by one unit.,1000,100,= 10,Here, the opportunity cost of a computer is 10 tons of wheat.,A C T I V E L E A R N I N G 2: PPF and Opportunity Cost,22,In which country is the opportunity cost of cloth lower?,FRANCE,ENGLAND,A C T I V E L E A R N I N G 2: Answers,23,England, because its PPF is not as steep as Frances.,FRANCE,ENGLAND,CHAPTER 2 THINKING LIKE AN ECONOMIST,Economic Growth and the PPF,With additional resources or an improvement in technology, the economy can produce more computers,more wheat,or any combination in between.,Economic growth shifts the PPF outward.,CHAPTER 2 THINKING LIKE AN ECONOMIST,The Shape of the PPF,The PPF could be a straight line, or bow-shaped Depends on what happens to opportunity cost as economy shifts resources from one industry to the other. If opp. cost remains constant, PPF is a straight line. (In the previous example, opp. cost of a computer was always 10 tons of wheat.) If opp. cost of a good rises as the economy produces more of the good, PPF is bow-shaped.,CHAPTER 2 THINKING LIKE AN ECONOMIST,Why the PPF Might Be Bow-Shaped,As the economy shifts resources from beer to mountain bikes: PPF becomes steeper opp. cost of mountain bikes increases,CHAPTER 2 THINKING LIKE AN ECONOMIST,A,Why the PPF Might Be Bow-Shaped,At point A, most workers are producing beer, even those that are better suited to building mountain bikes. So, do not have to give up much beer to get more bikes.,Mountain Bikes,Beer,At A, opp. cost of mtn bikes is low.,CHAPTER 2 THINKING LIKE AN ECONOMIST,B,Why the PPF Might Be Bow-Shaped,At B, most workers are producing bikes. The few left in beer are the best brewers. Producing more bikes would require shifting some of the best brewers away from beer production, would cause a big drop in beer output.,Mountain Bikes,Beer,At B, opp. cost of mtn bikes is high.,CHAPTER 2 THINKING LIKE AN ECONOMIST,Why the PPF Might Be Bow-Shaped,So, PPF is bow-shaped when different workers have different skills, different opportunity costs of producing one good in terms of the other. The PPF would also be bow-shaped when there is some other resource, or mix of resources with varying opportunity costs. E.g., different types of land suited for different uses,CHAPTER 2 THINKING LIKE AN ECONOMIST,The PPF: A Summary,The PPF shows all combinations of two goods that an economy can possibly produce, given its resources and technology.,The PPF illustrates the concepts of tradeoff and opportunity cost, efficiency and inefficiency, unemployment, and economic growth.,A bow-shaped PPF illustrates the concept of increasing opportunity cost.,CHAPTER 2 THINKING LIKE AN ECONOMIST,Microeconomics and Macroeconomics,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. These two branches of economics are closely intertwined, yet distinct: they address different questions.,CHAPTER 2 THINKING LIKE AN ECONOMIST,The Economist as Policy Advisor,As scientists, economists make positive statements, which attempt to describe the world as it is. As policy advisors, economists make normative statements, which attempt to prescribe how the world should be. Positive statements can be confirmed or refuted, normative statements cannot. Govt employs many economists for policy advice. E.g., the U.S. President has a Council of Economic Advisors, which the author of this textbook recently chaired.,A C T I V E L E A R N I N G 3: Identifying positive vs. normative,Which of these statements are “positive” and which are “normative”? How can you tell the difference? a. Prices rise when the government increases the quantity of money. b. The government should print less money. c. A tax cut is needed to stimulate the economy. d. An increase in the price of gasoline will cause an increase in consumer demand for video rentals.,33,A C T I V E L E A R N I N G 3: Answers,a. Prices rise when the government increases the quantity of money. Positive, describes a relationship, could use data to confirm or refute. b. The government should print less money. Normative, this is a value judgment, cannot be confirmed or refuted.,34,A C T I V E L E A R N I N G 3: Answers,c. A tax cut is needed to stimulate the economy. Normative, another value judgment. d. An increase in the price of gasoline will cause an increase in consumer demand for video rentals. Positive, describes a relationship. Note that a statement need not be true to be positive.,35,CHAPTER 2 THINKING LIKE AN ECONOMIST,Why Economists Disagree,Economists often give conflicting policy advice. They sometimes disagree about the validity of alternative positive theories about the world. They may have different values and, therefore, different normative views about what policy should try to accomplish. Yet, there are many propositions about which most economists agree.,CHAPTER 2 THINKING LIKE AN ECONOMIST,CHAPTER SUMMARY,As scientists, economists try to explain the world using models with appropriate assumptions. Two simple models are the Circular-Flow Diagram and the Production Possibilities Frontier. Microeconomics studies the behavior of consumers and firms, and their interactions in markets. Macroeconomics studies the economy as a whole. As policy advisers, economists offer advice on how to improve the world.,美国和日本工人每人每年可以生产4辆汽车。一个美国工人1年可以生产10吨粮食，而一个日本工人1年可以生产5吨粮食。假设每个国家有1亿工人，他们能以不变的比例在一种物品与另一种物品之间进行转换。 1、画出日本和美国的生产可能性边界。 2、美国和日本生产一辆汽车的机会成本分别是多少?粮食呢？ 3、没有贸易时，每个国家有一半工人生产汽车，一半工人生产粮食。每个国家能生产和消费多少汽车和粮食？ 4、若美国专门生产粮食，日本专门生产汽车，并且日本以1亿辆车交换2亿吨粮食，两国各生产和消费多少汽车和粮食？,练习,the production possibilities frontier,With half the workers in each country producing each of the goods, the U.S. would produce 200 million cars (thats 50 million workers times 4 cars each) and 500 million tons of grain (50 million workers times 10 tons each). Japan would produce 200 million cars (50 million workers times 4 cars each) and 250 million tons of grain (50 million workers times 5 tons each).,A C T I V E L E A R N I N G : Derive PPF in the U.S.,The U.S. has 50,000 hours of labor available for production, per month. Producing one computer requires 100 hours of labor. Producing one ton of wheat requires 10 hours of labor.,42,Use the following information to draw U.S. PPF.,Your graph should measure computers on the horizontal axis. Suppose the tradeoff between cars and grain is constant.,0,Derive Japans PPF,Japan has 30,000 hours of labor available for production, per month. Producing one computer requires 125 hours of labor. Producing one ton of wheat requires 25 hours of labor.,43,Use the following information to draw Japans PPF.,Your graph should measure computers on the horizontal axis. Suppose the tradeoff between cars and grain is constant.,0,CHAPTER 3 INTERDEPENDENCE AND THE GAINS FROM TRADE,The U.S. PPF,0,or 5000 tons of wheat,or any combination along the PPF.,CHAPTER 3 INTERDEPENDENCE AND THE GAINS FROM TRADE,Japans PPF,0,or 1200 tons of wheat,or any combination along the PPF.,Question:,Without trade, suppose each country uses half its labor to produce each of the two goods. What quantities of computers and wheat does each country produced? How much does each of them consume?,CHAPTER 3 INTERDEPENDENCE AND THE GAINS FROM TRADE,The U.S. Without Trade,Suppose the U.S. uses half its labor to produce each of the two goods.,0,Then it will produce and consume 250 computers and 2500 tons of wheat.,CHAPTER 3 INTERDEPENDENCE AND THE GAINS FROM TRADE,Japan Without Trade,0,Suppose Japan uses half its labor to produce each good.,Then it will produce and consume 120 computers and 600 tons of wheat.,CHAPTER 3 INTERDEPENDENCE AND THE GAINS FROM TRADE,Consumption With and Without Trade,Without trade, U.S. consumers get 250 computers and 2500 tons wheat. Japanese consumers get 120 computers and 600 tons wheat. We will compare consumption without trade to consumption with trade. First, we need to see how much of each good is produced and traded by the two countries.,0,A C T I V E L E A R N I N G : Production under trade,1. Suppose the U.S. produces 3400 tons of wheat. How many computers would the U.S. be able to produce with its remaining labor? Draw the point representing this combination of computers and wheat on the U.S. PPF. 2. Suppose Japan produces 240 computers. How many tons of wheat would Japan be able to produce with its remaining labor? Draw this point on Japans PPF.,50,0,CHAPTER 3 INTERDEPENDENCE AND THE GAINS FROM TRADE,U.S. Production With Trade,Producing 3400 tons of wheat requires 34,000 labor hours.,0,The remaining 16,000 labor hours are used to produce 160 computers.,CHAPTER 3 INTERDEPENDENCE AND THE GAINS FROM TRADE,Japans Production With Trade,Producing 240 computers requires all of Japans 30,000 labor hours.,0,So, Japan would produce 0 tons of wheat.,CHAPTER 3 INTERDEPENDENCE AND THE GAINS FROM TRADE,International Trade,Exports: goods produced domestically and sold abroad Imports: goods produced abroad and sold domestically,0,A C T I V E L E A R N I N G 3: Consumption under trade,How much of each good is consumed in the U.S.? Plot this combination on the U.S. PPF. How much of each good is consumed in Japan? Plot this combination on Japans PPF.,54,Suppose the U.S. exports 700 tons of wheat to Japan, and imports 110 computers from Japan. (So, Japan imports 700 tons wheat and exports 110 computers.),0,CHAPTER 3 INTERDEPENDENCE AND THE GAINS FROM TRADE,U.S. Consumption With Trade,0,CHAPTER 3 INTERDEPENDENCE AND THE GAINS FROM TRADE,Japans Consumption With Trade,0,CHAPTER 3 INTERDEPENDENCE AND THE GAINS FROM TRADE,Trade Makes Both Countries Better Off,gains from trade,consumption with trade,consumption without trade,U.S.,0,CHAPTER 3 INTERDEPENDENCE AND THE GAINS FROM TRADE,Where Do These Gains Come From?,Absolute advantage: the ability to produce a good using fewer inputs than another producer The U.S. has an absolute advantage in the production of wheat: producing a ton of wheat uses 10 labor hours in the U.S. vs. 25 in Japan. If each country has an absolute advantage in one good and specializes in that good, then both countries can gain from trade.,0,CHAPTER 3 INTERDEPENDENCE AND THE GAINS FROM TRADE,Where Do These Gains Come From?,Which country has an absolute advantage in computers? Producing one computer requires 125 labor hours in Japan, but only 100 in the U.S. The U.S. has an absolute advantage in both goods!,0,So why does Japan specialize in computers? Why do both countries gain from trade?,CHAPTER 3 INTERDEPENDENCE AND THE GAINS FROM TRADE,Two Measures of the Cost of a Good,Two countries can gain from trade when each specializes in the good it produces at lowest cost. Absolute advantage measures the cost of a good in terms of the inputs required to produce it. Recall: Another measure of cost is opportunity cost.,0,In our example, the opportunity cost of a computer is the amount of wheat that could be produced using the labor needed to produce one computer.,CHAPTER 3 INTERDEPENDENCE AND THE GAINS FR