Preliminaries参考.pptVIP

Chapter 1 Chapter 1 Preliminaries Topics to be Discussed The Themes of Microeconomics What Is a Market? Real Versus Nominal Prices Why Study Microeconomics? Preliminaries Microeconomics deals with: Behavior of individual units When Consuming How we choose what to buy Preliminaries Microeconomics deals with: Behavior of individual units When Producing How we choose what to produce Preliminaries Microeconomics deals with: Markets: The interaction of consumers and producers Preliminaries Macroeconomics deals with: Analysis of aggregate issues: Economic growth Inflation Unemployment Preliminaries The Linkage Between Micro and Macro-economics Microeconomics is the foundation of macroeconomic analysis The Themes of Microeconomics According to Mick Jagger* the Rolling Stones “You can’t always get what you want” *Economics degree from London School of Economics The Themes of Microeconomics Why Not? Limited Resources The Themes of Microeconomics Microeconomics Allocation of Scarce Resources and Trade-offs In a planned economy In a market economy The Themes of Microeconomics Microeconomics and Optimal Trade-offs 1. Consumer Theory 2. Workers 3. Theory of the Firm The Themes of Microeconomics Microeconomics and Prices The role of prices in a market economy How prices are determined Theories and Models Microeconomic Analysis Theories are used to explain observed phenomena in terms of a set of basic rules and assumptions. For example The Theory of the Firm The Theory of Consumer Behavior Theories and Models Microeconomic Analysis Models: a mathematical representation of a theory used to make a prediction. Theories and Models Microeconomic Analysis Validating a Theory The validity of a theory is determined by the quality of its prediction, given the assumptions. Theories and Models Microeconomic Analysis Evolving the Theory Testing and refining theories is central to the development of the science of economics. Positive Versus Normative Analysis Positive Analysis Posit