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HO3e ch01
HO3e ch01
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Economics R. Glenn Hubbard, Anthony Patrick OBrien, 3e.
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CHAPTER
Economics:
Foundations
and Models
Prepared by:
Fernando Quijano
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Economics R. Glenn Hubbard, Anthony Patrick OBrien, 3e.
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CHAPTER
1
Chapter Outline and
Learning Objectives
Economics:
Foundations
and Models
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Making
the
Connection
YOUR TURN: Test your understanding by doing related problem 1.7 at the end of
this chapter.
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Solved Problem
1-1
YOUR TURN: For more practice, do related problems 1.4, 1.5, and 1.6 at the end
of this chapter.
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Economic Models
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Economic Models
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Economic Models
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YOUR TURN: Test your understanding by doing related problem 3.7 at the end of this
chapter.
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Economic Models
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Microeconomics and
Macroeconomics
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A Preview of Important
Economic Terms
Entrepreneur
Profit
Innovation
Technology
Firm, company, or
business
Household
Factors of production or
economic resources
Capital
Human capital
Goods
Services
Revenue
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AN INSIDE
LOOK
at Policy
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KEY TERMS
Allocative efficiency
Centrally planned economy
Economic model
Economic variable
Economics
Equity
Macroeconomics
Marginal analysis
Market
Market economy
Microeconomics
Mixed economy
Normative analysis
Opportunity cost
Positive analysis
Productive efficiency
Scarcity
Trade-off
Voluntary exchange
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Appendix
LEARNING OBJECTIVE
Review the use of graphs
and formulas.
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Appendix
LEARNING OBJECTIVE
Review the use of graphs
and formulas.
Values for an economic variable are often displayed as a bar graph or as a pie chart.
In this case, panel (a) shows market share data for the U.S. automobile industry as a bar graph, where the
market share of each group of firms is represented by the height of its bar.
Panel (b) displays the same information as a pie chart, with the market share of each group of firms
represented by the size of its slice of the pie.
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Appendix
LEARNING OBJECTIVE
Review the use of graphs
and formulas.
Time-Series Graphs
Both panels present time-series graphs of Ford Motor Companys worldwide sales during each year from
2001 to 2008. Panel (a) has a truncated scale on the vertical axis, and panel (b) does not.
As a result, the fluctuations in Fords sales appear smaller in panel (b) than in panel (a).
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Appendix
LEARNING OBJECTIVE
Review the use of graphs
and formulas.
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LEARNING OBJECTIVE
Appendix
Slope
Slope
($12 $14)
(65 55)
y
x
2
10
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Rise
Run
0.2
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Appendix
LEARNING OBJECTIVE
Review the use of graphs
and formulas.
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Appendix
LEARNING OBJECTIVE
Review the use of graphs
and formulas.
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Economics R. Glenn Hubbard, Anthony Patrick OBrien, 3e.
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Appendix
LEARNING OBJECTIVE
Review the use of graphs
and formulas.
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LEARNING OBJECTIVE
Appendix
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Appendix
LEARNING OBJECTIVE
Review the use of graphs
and formulas.
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Appendix
LEARNING OBJECTIVE
Review the use of graphs
and formulas.
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LEARNING OBJECTIVE
Appendix
Formulas
Formula for a Percentage Change
One important formula is the percentage change.
GDP2008 GDP2007
x 100
GDP2007
Percentage change (
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LEARNING OBJECTIVE
Appendix
Formulas
Formulas for the Areas of a Rectangle and a Triangle
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LEARNING OBJECTIVE
Appendix
Formulas
Formulas for the Areas of a Rectangle and a Triangle
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Appendix
LEARNING OBJECTIVE
Review the use of graphs
and formulas.
Formulas
Summary of Using Formulas
Whenever you must use a formula, you should follow these
steps:
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