How does the use of a very simplified model of the economy such as
those found in a production possibilities frontier help you to understand
about the economy?
The production possibilities frontier diagram shows basic outputs that are potentially possible within the parameters of the frontier. It’s easy to understand the graph. The endpoints are the extremes and inside the frontier lay all sorts of possibilities. When the technology advanced in the computer industry the economy was able to produce more computers for any given number of cars. This is apparent in the outward shift of the frontier and the result is also an expanding economy in both these industries. The graphs make things clearer and I imagine the ppfrontier will continue to give abridged rudimentary versions with seemingly intricate economic growth concepts
Give an example of a positive or normative statement about the economy. Why does it matter which it is?
Positive statement: Hiring illegal Mexicans keep the Aspen hotel labor costs down.
Normative statement: We should hire only American citizens because illegals take jobs away from local residents.
Positive statements are a tangible reality of the economy while normative statements are progress orientated and are geared to advancing the economy.
Your first blog entry should respond to the following questions centered around Chapter 1 in your text:
What in this chapter made you think about an economic concept differently than your previous beliefs?
What new questions do you have now about the US economy based on this chapter?
I never heard of the ten principles of economics.Scarcity has a whole new meaning for sure.My grandfather and father had this rudimentary economic belief cycle comprised of just a few steps. “You go to work to make the money to buy the food to have the energy to go to work…” and on and on. My father ended up president of a large clothing company and I remember it was near bankruptcy when he took the reins and he was about as rational a person as there is. “Cheap” is what I called him, but I remember him analyzing household items using the words “marginal benefit”. I guess he must have took Micro or Macro at Yale. I was also wrong about the booming economy of China ruining the U.S.Trade makes us each better off(even though there seems an abundance of Chinese consumer products. I didn’t know about the perils of printing too much money.What causes inflation? The quantity of money was the furthest thing from my mind.My question to the U.S.Treasury currency issue is how much is too much and are we already there?