Unit 1A: Basic Economic Concepts

What better way to begin a study of Macroeconomics then to take a look at the basics? In this unit we will look at the important ideas of scarcity and opportunity costs. This is the introduction on how to think like an economist. In economics we will have to examine all choices from a cost - benefit perspective, "What is there to gain? What has to be given up? And is the cost too high?" To get a good look at this we will examine two important concepts, comparative advantage and trade. We will understand how opportunity costs are important to understand why we trade and why people benefit from trade."

Study Tools

Online Textbook Resources

Unfortunately, due to the age of the textbook, the publisher has removed all online content associated with our textbook. While we will use the book as an important source, the links given therein are no loner functioning. As a result, I will look online for other sources related to the topics in our text. Likewise, I encourage you to let me know of any useful websites that you come across in your studies so that I may add them to the site and share with everyone.

Slideshows

Slideshows are best if viewed in full screen.

The 10 Principles of Economics

Circular Flow Model

Demand

Supply

Videos

Video Link: Learner.org

Each episode is nearly 30 minutes and originally aired on PBS in the 1980s. This series investigates important economic concepts through historic events in American History. In the last 4-5 years, each episode has been updated with an additional, more current event that demonstrates the concept at hand.

• Economics U$A: #1 Markets

  From the website, The return of U.S. troops from overseas following World War II created a massive demand for cheap housing. Rising labor and energy costs in the United States in the '60s and '70s forced domestic steel manufacturer NUCOR to find ways to lower production costs. In 2009, rookie pitcher phenomenon Stephen Strasburg signed the largest rookie contract in baseball history. These stories show how a well-functioning free market pricing system determines how producers manufacture goods, what they will pay, what goods will be manufactured, and for whom the goods will be produced.

  If the video does not open, in the windown that opens, scroll down to the title "1. Markets" and click the "VoD" icon on the right.

• Economics U$A: #14 Resources and Scarcity

  From the website, Faced with dwindling resources, Congress fiercely debated whether to preserve 100 million acres of Alaskan land as a national park, or open the land for mineral exploration. World War II saw an unprecedented period of economic growth. The need to mobilize resources overseas quickly was palpable. In the 1970s U.S. textile industries risked competitive advantage in increasingly active Asian markets by investing more in the health of their workers. In all investments there are trade-offs and choices. These stories show how the cost of using some resources sometimes comes at the expense of others.

  If the video does not open, in the windown that opens, scroll down to the title "14. Resources and Scarcity" and click the "VoD" icon on the right.

Mankiw's "10 Principles of Economics" Part 1

Although we a re currently forgoing the use of Mankiw's textbook, his ideas on the basic principles of economics are still useful. He claims that there are 10 Basic Principles. This first segment focuses on How People Make Decisions.

Mankiw's "10 Principles of Economics" Part 2

Coninuing from the first segment, this second segment focuses on How People Interact.

Mankiw's "10 Principles of Economics" Part 3

Coninuing from the second segment, this third segment focuses on How the Economy Works as A Whole.

Principles of Economics Translated, by the Standup Economist

Now that you spent 40 minutes viewing the 10 Principles of Economics, why not take 5 minutes to step back and laugh at them.

Economics Made Memorable: Trade-Offs and Opportunity Costs, part1: Costs

This basic video introduces the concept of Opportunity Costs and illustrates, albeit, in a very mechanical way, that there are hidden costs to every decision beyond the obvious money costs.

Economics Made Memorable: Trade-Offs and Opportunity Costs, part2: Benefits

The second part of this series demonstrates that benefits are sometimes difficult to determine thereby making it even more difficult to compare them to the costs.

Return to Mocha

This is a fun video from the 1980s (broken into three parts to fit on YouTube). This video illustrates the operations of the three basic economic systems: Command, Traditional, Market. On a deeper level, it also illustrates the concepts of absolute advantage and comparative advantage.

Copyright M. Caggia 2016