Thinking Question: Why are some countries and people wealthy and some not?

Adam Smith

    Among the first to consider this question was the philosopher Adam Smith.

Known as ‘the father of modern economics”.

Wrote

The Wealth of Nations.

Developed an economic way of thinking.

What is economics all about?

1.

Explores everyday mysteries and economic enigmas-puzzles or riddles that might be explained through economic analysis.

“..it is about observing the world with genuine curiosity and admitting that it is full of mysteries…” Steven Landsburg The Armchair Economist

Every man is rich or poor according to the degree in which he can afford to enjoy the necessaries, conveniences, and amusements of human life.

-Adam Smith-

Think-Pair-Share

Working with a partner write a simple statement about what you think the quote means. 10 mins.

Takeaway

Adam Smith was not the first to explore everyday economic events but developed an economic way of thinking and the more you learn how to think like an economist the better you will be at making sound decisions in almost every aspect of your life.

What is economics all about?

Economics “is about stripping a layer or two from the surface of life and seeing what is happening underneath.” -Steven Levitt-

Freakonomics

What is Economics All About?

1.

2.

3.

4.

Explores everyday mysteries and economic enigmas-puzzles or riddles Explores how people use limited resources to satisfy unlimited wants.

The science of decision making. Explores what is and what should be.

Positive vs. Normative

Economic Enigmas

       Do cross walk button really work?

Why do the keypad buttons on drive up cash machines have Braille dots? Why is milk sold in rectangular containers while soda is sold in round ones? Why are DVDs sold in larger packages than CDs when the disc is the same size? Why does Apple sell its black laptops for $150 more than the identically configured white ones? Why are seat belts required in cars but not school buses? Why is it legal to drive while eating a cheeseburger or drinking coffee but illegal while talking on a cellphone? Why do most stores place men's fashion on the lower floors and women's fashions on the higher floors?

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What Seven Principles Guide an Economic Way of Thinking?

 Scarcity-forces tradeoffs principle: Limited resources force people to make choices and face tradeoffs when they choose.

What Seven Principles Guide an Economic Way of Thinking?

 Cost-versus-benefits principle: People choose something when the benefits of doing so are greater than the costs.

What Seven Principles Guide an Economic Way of Thinking?

 Thinking-at –the-margin principle: most decisions involve choices about a little more or a little less of something.

What Seven Principles Guide an Economic Way of Thinking?

 Incentives-matter principle: People respond to incentives in generally predictable ways.

What Seven Principles Guide an Economic Way of Thinking?

 Trade-makes-people-better-off principle: By focusing on what we do well and then trading with others, we will end up with more and better choices than by doing everything for ourselves.

What Seven Principles Guide an Economic Way of Thinking?

 Markets-coordinate-trade principle: Markets usually do better than anyone or anything else at coordinating exchanges between buyers and sellers.

What Seven Principles Guide an Economic Way of Thinking?

 Future-consequences-count principles: Decisions made today have future (and often unintended) consequences.

What is economics all about?

2.

Explores how people use limited resources to satisfy unlimited wants.

Resource- anything used to produce an economic good or services.

What is economics about?

3.

4.

The science of decision making.

Explores what is and what should be.

Positive vs. Normative Positive economics describes how things are.

Normative focuses on how things ought to be.

Bell Work

 Write the key terms in your notebook on page 11 (right side) of your notebook.