Chapter 2-Thinking Like an Economist
Chapter 2-Thinking Like an Economist
Chapter 2-Thinking Like an Economist
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Qu<strong>an</strong>tity of<br />
Computers<br />
Produced<br />
The Production Possibilities<br />
Frontier<br />
3,000<br />
2,200<br />
2,000<br />
1,000<br />
B<br />
C<br />
A<br />
D<br />
Production<br />
possibilities<br />
frontier<br />
Microeconomics <strong>an</strong>d<br />
Macroeconomics<br />
! Microeconomics focuses on the<br />
individual parts of the economy.<br />
! How households <strong>an</strong>d firms make decisions<br />
<strong>an</strong>d how they interact in specific markets<br />
! Macroeconomics looks at the economy as<br />
a whole.<br />
! How the markets, as a whole, interact at the<br />
national level.<br />
0 300 600 700 1,000<br />
Qu<strong>an</strong>tity of<br />
Cars Produced<br />
Concepts Illustrated by the<br />
Production Possibilities Frontier<br />
! Efficiency<br />
! Tradeoffs<br />
! Opportunity Cost<br />
! Economic Growth<br />
The Essence of<br />
Microeconomics-Buyers<br />
<strong>an</strong>d Sellers<br />
Qu<strong>an</strong>tity<br />
of Computers<br />
Produced<br />
4,000<br />
3,000<br />
2,100<br />
2,000<br />
The Production<br />
Possibilities Frontier<br />
A<br />
E<br />
An outward shift<br />
in the production<br />
possibilities<br />
frontier<br />
Increase in<br />
technology to<br />
produce<br />
computers.<br />
The M<strong>an</strong>y Facets of<br />
Macroeconomics<br />
0 700 750 1,000<br />
Qu<strong>an</strong>tity of<br />
Cars Produced<br />
5<br />
6
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