The desire for food is limited in every man by the narrow capacity of the human stomach; but the desire for the conveniences and ornaments of building, dress, equipage, and household  furniture, seem to have no limit or boundary.

The Economic Problem

Key Definitions*

Nine Principles

Individual Choice Principle:
Scarcity

Individual Choice Principle:
Opportunity Cost

Individual Choice Principle:
Marginal Decisions

Individual Choice Principle:
Rational Decisions

Market Principle:
Trade is Win-Win

Market Principle:
Equilibrium

Market Principle:
Social Goal: Efficiency

Market Principle:
Markets are Efficient

Market Principle:
Government Role

Question:

 Methodology:
How Do Economists Think?

 Economic Theories: Models

Economic Activities & Interactions

Positive vs. Normative Economics

Economic “Systems”

Questions for our 1^st model:

PPF:
Production Possibilities Frontier

Factors Affecting PPF

Example

PPF Model Illustrates

Who makes what & who trades?

In the next unit: