1. Mr. Bernstein Module 1: The Study of Economics September 2017
AP Economics
Mr. Bernstein
Module 1: The Study of Economics
September 2017

2. AP Economics Mr. Bernstein
Resources are Scarce
Land
Labor
Capital
Entrepreneurship or Human Capital
Scarcity implies choices must be made by individuals, corporations or societies
Example: Building a dam…or fracking

3. AP Economics Mr. Bernstein
Opportunity Cost
The Real Cost of Something Is What You Must Give Up to Get It
Example: Buy a new phone for $200, but now cannot buy new shoes. Can’t have both.
Economic costs are $200 PLUS the enjoyment of wearing new shoes, which you now can’t do
Opportunity costs are implicit, not explicit

4. AP Economics Mr. Bernstein
The Difference between Micro and Macro
Microeconomics focuses on choices made by individuals, households, or firms—the smaller parts that make up the economy as a whole.
Macroeconomics focuses on economic aggregates—economic measures such as the unemployment rate, the inflation rate, and gross domestic product—that summarize data across many different markets. Macroeconomics focuses on the bigger picture.

5. AP Economics Mr. Bernstein
Positive vs Normative Economics
Positive economics: Analysis used to determine how the world works; no judgments applied…”what is” or “what will be”
Normative economics: How the world should be; may involve value judgments on right and wrong
Examples: “It is 80 degrees in here” vs. “It’s too hot in here”

6. AP Economics Mr. Bernstein
When and Why Economists Disagree
Economists may disagree because they have different values or opinions
Economists may disagree because they use different models or methods to conduct their analysis
Over time, disputes in economics are resolved by the accumulation of evidence (but this can sometimes take a long time!)
Example: The debate over minimum wages