bu-204 macro economics – week 2 seminar
DESCRIPTION
BU-204 Macro Economics – Week 2 Seminar. Welcome to. Overview. Welcome Review of Week 1 Material Questions Unit 2 Material Questions Preview of Unit 3 End. Review of Unit 1. Scarcity Opportunity Cost Trade-Offs Cost/Benefit Marginal Cost Analysis. Scarcity. - PowerPoint PPT PresentationTRANSCRIPT
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BU-204 Macro Economics – Week 2 Seminar
Welcome to
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Overview
Welcome
Review of Week 1 Material
Questions
Unit 2 Material
Questions
Preview of Unit 3
End
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Review of Unit 1
Scarcity
Opportunity Cost
Trade-Offs
Cost/Benefit
Marginal Cost Analysis
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Limited resources
Choices must be made
Opportunity CostThe value of the next best alternative
Marginal analysis
Scarcity
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Opportunity Cost
Retrieved from http://strom.clemenson.edu
Retrieved from www.stus.com
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Example of cost of educationAnnual salary - $50,000 (Implicit)Tuition - $25,000 (Explicit)2 years of graduate school - $100,000 in
salary and $50,000 in tuition Total opportunity cost - $150,000
(Implicit & Explicit)Future marginal income of working life
should be higher
Opportunity Cost
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Trade offs
Cost vs. Benefits
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Marginal Cost Analysis
Efficiency in resource allocation
Analysis of benefits and costs of the marginal unit of good or input
Maximization of utility subject to a budget contraint
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Questions
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Overview
Welcome
Review of Week 1 Material
Questions
Unit 2 Material
Questions
Preview of Unit 3
End
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Unit 2 Material
Economic Model
Production Possibilities Frontier
Comparative vs. Absolute Advantage
Circular Flow Diagram
Homework Assignment
Discussion Question
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Economic Model
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Unit 2 Material
Economic Model
Production Possibilities Frontier
Comparative vs. Absolute Advantage
Circular Flow Diagram
Homework Assignment
Discussion Question
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Unit 2 Material
Economic Model
Production Possibilities Frontier
Comparative vs. Absolute Advantage
Circular Flow Diagram
Homework Assignment
Discussion Question
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The simplest circular-flow model shows the interaction between households and firms. In this model, firms supply goods and services to households which, in turn supply factors of production to firms
Which of the following is a normative statement? We would all be better off it we could reduce our dependence on oil imports
Summary Points
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• Reliance on finite supplies of foreign oil and on coal fired electric power plants causes ever increasing prices that we must pay for the oil and the deleterious effects on our environment from both as sources of greenhouse gasses contributing to global warming.There are several renewable sources of energy available to the world. These include:1. Wind power (both large scale wind turbines and household sized roof mounted wind turbines to co-generate electricity)
Discussion
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• 2. Solar water heating (roof mounted solar collectors)3. Solar photovoltaic electric generation (solar cells mounted on roofs to co-generate electricity)4. Ocean wave generation of electricity5. In transportation, the development of all electric and hybrid electric cars
Discussion
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• Positive vs. Normative Statements• Workers in Asia often work in sweatshop
conditions earning only pennies an hour. American workers are more productive and as a result earn higher wages. In order to preserve the dignity of the American workplace, the government should enact legislation banning imports of low-wage Asian clothing.
Assignment
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• Positive vs. Normative Statements• Referring to the same situation in question
1, but instead of legislation banning the imports, assume that the government enacts a special tax on imported clothing that is so high that the selling price of the imports would be equal to the selling price of the same clothing made in America. This kind of tax is called a tariff and is enacted to protect domestic producers of the same items that can be imported at much lower costs.
Assignment
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• A growing economy means that the economy is producing more and more “stuff”, either because it has more resources (workers), or uses those resources more productively (smarter, better workers, working with better machines and systems). A growing economy that produces more and more “stuff” normally means that the people have a higher and higher standard of living.
Assignment
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• If the government adopts a “free trade” policy towards all imports, including the low cost clothing of question 1 and 2, in which it places no barriers to importing items, can that action help the economy to grow? Explain your answer. (10 points)
Assignment
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Thank you for attending. I look forward to seeing you next week!