02thinkinglike.ppt

2Thinking Like an Economist第一页，编辑于星期五：十七点 三十九分第一页，编辑于星期六：十点 五十八分Thinking Like an Economist§Every field of study has its own terminologylMathematics•integrals  axioms  vector spaceslPsychology•ego  id  cognitive dissonancelEconomics•supply  opportunity cost  elasticity  consumer surplus  demand  comparative advantage  deadweight loss第二页，编辑于星期五：十七点 三十九分第二页，编辑于星期六：十点 五十八分Thinking Like an Economist§Economics trains you to. . . . lThink in terms of alternatives.lEvaluate the cost of individual and social choices.lExamine and understand how certain events and issues are related.第三页，编辑于星期五：十七点 三十九分。

第三页，编辑于星期六：十点 五十八分THE ECONOMIST AS A SCIENTIST§The economic way of thinking . . .lInvolves thinking analytically and objectively.lMakes use of the scientific method.lWhat is the essence of scientific method?——the dispassionate development and testing of theories about how the world works.第四页，编辑于星期五：十七点 三十九分第四页，编辑于星期六：十点 五十八分The Scientific Method: Observation, Theory, and More Observation§Uses abstract models to help explain how a complex, real world operates.§Develops theories, collects, and analyzes data to evaluate the theories.§What is the difference between the method of economics and those of nature sciences?——Experimental method.第五页，编辑于星期五：十七点 三十九分。

第五页，编辑于星期六：十点 五十八分The Role of Assumptions§ Economists make assumptions in order to make the world easier to understand.§ The art in scientific thinking is deciding which assumptions to make.§ Economists use different assumptions to answer different questions.第六页，编辑于星期五：十七点 三十九分第六页，编辑于星期六：十点 五十八分Economic Models§ Economists use models to simplify reality in order to improve our understanding of the world§ Two of the most basic economic models include:lThe Circular Flow DiagramlThe Production Possibilities Frontier第七页，编辑于星期五：十七点 三十九分。

第七页，编辑于星期六：十点 五十八分Our First Model: The Circular-Flow Diagram§The circular-flow diagram is a visual model of the economy that shows how money flow through markets among households and firms.第八页，编辑于星期五：十七点 三十九分第八页，编辑于星期六：十点 五十八分Figure 1 The Circular FlowSpendingGoods andservicesboughtRevenueGoodsand servicessoldLabor, land,and capitalIncome = Flow of inputs and outputs = Flow of dollarsFactors ofproductionWages, rent,and profit FIRMS•Produce and sellgoods and services•Hire and use factorsof production •Buy and consumegoods and services•Own and sell factorsof productionHOUSEHOLDS •Households sell•Firms buyMARKETSFORFACTORS OF PRODUCTION •Firms sell•Households buyMARKETSFORGOODS AND SERVICES第九页，编辑于星期五：十七点 三十九分。

第九页，编辑于星期六：十点 五十八分Our First Model: The Circular-Flow Diagram§Firmsl Produce and sell goods and servicesl Hire and use factors of production§Householdsl Buy and consume goods and servicesl Own and sell factors of production第十页，编辑于星期五：十七点 三十九分第十页，编辑于星期六：十点 五十八分Our First Model: The Circular-Flow Diagram§Markets for Goods and Servicesl Firms selll Households buy§Markets for Factors of Productionl Households selll Firms buy第十一页，编辑于星期五：十七点 三十九分第十一页，编辑于星期六：十点 五十八分Our First Model: The Circular-Flow Diagram§Factors of Productionl Inputs used to produce goods and servicesl Land, labor, technology, institutions and capital第十二页，编辑于星期五：十七点 三十九分。

第十二页，编辑于星期六：十点 五十八分Our Second Model: The Production Possibilities Frontier§The production possibilities frontier is a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology.第十三页，编辑于星期五：十七点 三十九分第十三页，编辑于星期六：十点 五十八分Figure 2 The Production Possibilities FrontierProductionpossibilitiesfrontierABCQuantity ofCars Produced2,2006001,00030007002,0003,0001,000Quantity ofComputersProducedD第十四页，编辑于星期五：十七点 三十九分。

第十四页，编辑于星期六：十点 五十八分Our Second Model: The Production Possibilities Frontier§Concepts Illustrated by the Production Possibilities Frontier lEfficiencylTradeoffslOpportunity CostlEconomic Growth第十五页，编辑于星期五：十七点 三十九分第十五页，编辑于星期六：十点 五十八分Figure 3 A Shift in the Production Possibilities FrontierEQuantity ofCars Produced2,0007002,10075004,0003,0001,000Quantity ofComputersProducedA第十六页，编辑于星期五：十七点 三十九分第十六页，编辑于星期六：十点 五十八分Homework:Compare the efficiencies of point A and B; A and C1,000300BAC1,200800第十七页，编辑于星期五：十七点 三十九分。

第十七页，编辑于星期六：十点 五十八分Microeconomics and Macroeconomics§Microeconomics focuses on the individual parts of the economy.lHow households and firms make decisions and how they interact in specific markets§Macroeconomics looks at the economy as a whole.lEconomy-wide phenomena, including inflation, unemployment, and economic growth第十八页，编辑于星期五：十七点 三十九分第十八页，编辑于星期六：十点 五十八分THE ECONOMIST AS POLICY ADVISOR§When economists are trying to explain the world, they are scientists.§When economists are trying to change the world, they are policy advisor.第十九页，编辑于星期五：十七点 三十九分。

第十九页，编辑于星期六：十点 五十八分POSITIVE VERSUS NORMATIVE ANALYSIS§Positive statements are statements that attempt to describe the world as it is (or what the world is).lCalled descriptive analysis§Normative statements are statements about how the world should be.lCalled prescriptive analysis第二十页，编辑于星期五：十七点 三十九分第二十页，编辑于星期六：十点 五十八分§Positive or Normative Statements? lAn increase in the minimum wage will cause a decrease in employment among the least-skilled.POSITIVElThe income gains from a higher minimum wage are worth more than any slight reductions in employment.NORMATIVE??POSITIVE VERSUS NORMATIVE ANALYSIS?第二十一页，编辑于星期五：十七点 三十九分。

第二十一页，编辑于星期六：十点 五十八分§Positive or Normative Statements? Higher federal budget deficits will cause interest rates to increase.POSITIVElState governments should be allowed to collect from tobacco companies the costs of treating smoking-related illnesses among the poor.NORMATIVE??POSITIVE VERSUS NORMATIVE ANALYSIS?第二十二页，编辑于星期五：十七点 三十九分第二十二页，编辑于星期六：十点 五十八分The difference and relationship between positive and normative statements:§the former should be evaluated by analyzing data or facts; the latter by facts and values; and the latter should be evaluated by the former and the values.第二十三页，编辑于星期五：十七点 三十九分。

第二十三页，编辑于星期六：十点 五十八分Economists in Washington§. . . serve as advisers in the policymaking process of the three branches of government:lLegislativelExecutivelJudicial第二十四页，编辑于星期五：十七点 三十九分第二十四页，编辑于星期六：十点 五十八分WHY ECONOMISTS DISAGREE§They may disagree about the validity of alternative positive theories about how the world works.Income tax or consumption tax?§They may have different values and, therefore, different normative views about what policy should try to accomplish. 第二十五页，编辑于星期五：十七点 三十九分第二十五页，编辑于星期六：十点 五十八分。

Table 2 Ten Propositions about Which Most Economists AgreeCopyright © 2004 South-Western第二十六页，编辑于星期五：十七点 三十九分第二十六页，编辑于星期六：十点 五十八分Summary§Economists try to address their subjects with a scientist’s objectivity.lThey make appropriate assumptions and build simplified models in order to understand the world around them.lTwo simple economic models are the circular-flow diagram and the production possibilities frontier.第二十七页，编辑于星期五：十七点 三十九分第二十七页，编辑于星期六：十点 五十八分Summary§Economics is divided into two subfields:lMicroeconomists study decisionmaking by households and firms in the marketplace.lMacroeconomists study the forces and trends that affect the economy as a whole第二十八页，编辑于星期五：十七点 三十九分。

第二十八页，编辑于星期六：十点 五十八分Summary§A positive statement is an assertion about what the world is.§A normative statement is an assertion about what the world ought to be.§When economists make normative statements, they are acting more as policy advisors than scientists.第二十九页，编辑于星期五：十七点 三十九分第二十九页，编辑于星期六：十点 五十八分Summary§Economists who advise policymakers offer conflicting advice either because of differences in scientific judgments or because of differences in values.§At other times, economists are united in the advice they offer, but policymakers may choose to ignore it.第三十页，编辑于星期五：十七点 三十九分。

第三十页，编辑于星期六：十点 五十八分Appendix:Cause and Effect§The three traps about c-a-e relationship: Omitted variables(遗漏变量)—— Risk of Cancer and Number of lighters in House 第三十一页，编辑于星期五：十七点 三十九分第三十一页，编辑于星期六：十点 五十八分Reverse causality (反向因果关系)(The post hoc fallacy事后错误)——the Number of Violent and the Number of Police Officers. 第三十二页，编辑于星期五：十七点 三十九分第三十二页，编辑于星期六：十点 五十八分§The fallacy of Composition(以偏概全)——when you assume that what is true for the part is also true for the whole, you are committing the fallacy of composition.§In reality, this fallacy is the most frequent one that people make in the argument of something. 第三十三页，编辑于星期五：十七点 三十九分。

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