PART I  INTRODUCTION TO ECONOMICS

    I.  ECONOMICS-  WHAT IS IT AND WHY STUDY IT?

A.       Social or Behavioral Science.

B.       Economics defined.  The study of the methods that individuals and societies use to decide how scarce resources provided by nature and previous generations will be allocated among competing alternatives.

1.     Concentration on material aspects of society

2.       Scarcity and choice as a key.

a.       Choice/allocation

b.       Opportunity cost.   

c.       Competition.

d.     Risk and Choice

3.     Classification of economic resources.

a.      Land.

b.     Labor.

c.     Capital.

1)     Financial.

                     2)     Physical.

                     3)     Technology.

                     4)     Human.

                     5)      Savings and investment 

d.     Entrepreneurship

1)     Risk

                     2)     Organizational

4.     Note that how choices are made determine what kind  of economic organization a society has.

5.     Three questions an economic system must answer

             C.     Economics systems-ways of making economics choices.

1.     Three basic decisions an economy must make.

2.     Types of economic systems.

a.     Traditional

b.     Command

c.     Market.

3.     Economic Institutions.

a.     Economic systems are the result of complex and dynamic interactions among cultural,  psychological, historical and economic institutions.

b.    Institutions key to market system

    1) Markets

    2) Property rights

    3) Money

4.     Evaluation of economic systems.

a.     Stability 

b.     Advancing social goals. 

c.     Advancing material well being of individual.

d.     Equity

e.     Advancing Nation-State interests.

II Economics Perspective and Methodology. 

A.     Scope of economics.

1.      Micro.

          2.     Macro.

          3.     Normative and positive.

B.       A way of thinking.

1.     Using graphs and models as tools for analysis.

a.      Goods models; accurate and simple.

b.     Ceteris paribus assumption. 

2.     Define rational decision maker.       

3.     Define Fundamental Economic Premise.

4.     Use marginal analysis and sunk cost to analyze problems

a.    Define opportunity cost.

b.    Define marginal cost.

c.    Define sunk cost.

d.    Define marginal benefit.

                5.     Economic analysis in action:  Adam Smith and the harmony of interest between individual and social goals.

a.    Historical context.

b.    Specialization and national wealth.

c.    Why individuals specialize

d.    Role of competition.

e.     Laissez faire.

C.  A model for scarcity and opportunity cost:  production possibilities. 

              1.     Individual production possibilities.

a)    Input model:  study v. other activities.

b)     Output model:  production possibilities.

                c)    Note how opportunity cost is demonstrated by  model.

d)    Diminishing returns and the shape of the production possibilities frontier      

e)    Describe the concept of trade-off.

2.     Society production possibilities.         

a)     Guns v butter.

     1)     law of increasing opportunity cost.

                   2)     Efficiency

b)     Consumption goods versus Investment goods.

  c)   Shifts in the PPF

  3.     Growth as a way to

              D.     Economic efficiency and production possibilities.

1.    Productive.

2.     Allocative.

3.    Economic.

III   Trade and Efficiency

A.     Note the difference between a positive sum game and a zero sum game.

 B.     Gains from exchange production possibilities analysis.

1.     Construct and draw implications from a production possibilities schedule and curve (line).

 2.     Define and derive an opportunity cost ratio.

                    3.     Recognize and define comparative advantage and absolute advantage.

 4.     Be able to derive a trade ratio and demonstrate the gains from trade

5.              Note how above can be used to demonstrate increasing costs and economic efficiency from the standpoint of societal well being. 

a.     Derive a societal PPF from individual PPF.

b.     Determine the order of production that yields productive efficiency.

6.       Note how David Ricardo used above to demonstrate gains from free trade.

        a.    Explain historical context of Ricardo's writing

        b.   Note political economic impact of Ricardo's analysis

 7.     Note the sources of comparative advantage

a)     Natural

b)      Acquired

c)      Accidental

     B.     Consequences and Costs of Trade

          1.     Interdependence

2.       Transaction costs.-information about trading opportunities, working out trade agreements and transporting goods.

           3.     Potential costs of specialization.

                a.     Alienation.

                b.     Greater exposure to market shifts

4.   Trade can make some worse off.

                a.     Greater level of competition

                a.     Individual well being.

                b.     Group well being.

          5.     International Political Implications of Free Trade.

                 a.     Why nations restrict trade.

                      1.     Political.

                           a)     National defense.

                           b)     Retaliation.

                           c)     Protectionism.

                           e)     Further geopolitical goals

       f)    Sovereignty

                       2.     Economic

       a)      Infant Industry.

                           b)     Competitive Trade Strategy

3.    Social

a.    Cultural values

b.    Language

4.    Environment