1. Introduction to AP Economics
Welcome!

2. ECONOMICS

3. The World & Resources
People +

4. Why do we need Economics?
Resources are SCARCE
People have Unlimited Wants & Needs
FORCES:
3) Society to allocate resources

5. Exact Sciences Social Science
versus
Social Science
Fact based
Proofs often used:
2 + 2 = 4
Theory based
Difficult to prove
Based on human behavior
Examples:
Psychology
Economics
History
Examples:
Physics
Chemistry
Mathematics
Social sciences are academic disciplines which study the social life of human groups & individuals
Examples: anthropology, economics, geography, history, political science, psychology & sociology

6. Formal Definition of Economics
The social science of how society allocates scarce resources among unlimited wants and needs.

7. Economic Systems All economic systems allocate scarce resources
Society must choose both a political & economic system

8. 3 Types of Economic Systems
MARKET
COMMAND
TRADITIONAL

9. What is a Millennial? Generation Y born between 1982-1997
Oldest about 35 years old

10. End of Day 1

11. Economics is the social science of how a society allocates their scarce resources among unlimited wants and needs.
Air versus Oil

12. There is NO Free Lunch Nothing is free in economics
People face Trade-offs in all decision making
Decisions have both:
-Opportunity Costs & Opportunity Benefits
-Short Run and Long Run implications

13. 2 Types of Costs:

14. Marginal Analysis Decisions are rarely “all or nothing”
Most decisions are made at the Margin
margin = next unit (consumed or produced)
You first decide to study. => Marginal decision = how long to study?
You buy popcorn at a movie => Marginal decision = what size to buy?
Marginal Benefit (MB) vs. Marginal Cost (MC)
Value of next unit consumed Cost of next unit produced
In economics, when the MB ≥ MC then “do it”

15. Marginal Benefit WorksheetMB MC
Total Earnings Total Cost
High School $800,000 $0
Associate $1,200,000 $25,000
Bachelor’s $2,000,000 $100,000
Master’s $2,100,000 $200,000
Doctorate $2,500,000 $2,500,000

16. Should I go to college? Opportunity Benefit Opportunity Cost
Worksheet #1 Trade-off Analysis
Should I go to college?
Opportunity Benefit
Opportunity Cost
Explicit Cost?
Implicit Cost?
Long Run?
Short Run?

17. Should the Gov’t Subsidize Electric Cars?
Benefits
Costs

18. End of 2nd Day
Please read your textbook!