Economics and Economic Theories

Individual project by Giovanni Romano

Micro vs Macro Economics
 Microeconomics example: If I have good grades at school and win a scolarship, can I go to
a better university that offers me more possibilities for my future?

 Macroeconomics example: If the government raised the taxes on food, could I still afford
to have dinner out twice a week?

 Micro-Macro relationship: In the case that banks increased interest rates, my family would
not be able to pay the house loan anymore. A macro level decision like this would affect
my family since more money would be needed.
Production Possibility Frontier
 If Apple was producing two products anywhere along the possibility curve, it would excel
because all resources are fully employed for the production. In particular, considering the
iPhone 8 and the MacBook Pro as the two products, Apple would be producing the two
commodities at its best, if the combinations (A and B in the diagram) were along the
frontier.

 On the other hand, if they were producing at a point

within the curve (C), it would represent either
inefficient use of resources or failure to use all the
available resources.

iPhone 8
 An unattainable combination is represented by all
the points (D) beyond the curve.

MacBook Pro
 Early Canadian Economic Events and
Economic Schools of Thougth
ADAM SMITH KARL MARX
• Philosopher,
economist.

• Scottish. • German.

• The Theory of Moral • The Communist Manifesto,

Sentiments, The Wealth of
Nations.
• He laid the foundations of
classical free market
economy.
• Rational self-interest and
competition can lead to
economic prosperity.
Das Kapital.
• Human societies develop
through class struggle.
• Capitalism will collapse and
will be replaced by a new
system: socialism.
 Four Key Economic Questions
M
I
 What is produced and how? Choosing to produce a particular combination of Choosing a particular allocation of
C goods. resources.

R Which method of production should we use? Influenced by efficient use of resources Quantity of goods
because of scarcity. produced.
O
Example: in order to be productive and use our resources efficiently,
E should we product tootbrushes and toothpaste or toothbrushes and dental Relationship with the PPF: Where will the
floss. Which method is the best? How much of a good and how much of economy produce (within or along the
C the other? curve)?
O
 What is consumed and by whom? Will the economy consume exactly the same goods
N as it produces?
What is the relationship between an economy’s production
O of goods and its citizens consumption?
If production takes place on the PPF, what about
M Who gets a little, who gets a lot, why?
consumption?

I
Example: does the economy consume all the tootbrushes produced?
C What is its distribution among the population?

S
 Four Key Economic Questions
M
A  Why are resources sometimes idle?
Is there anything that the government could do
C to reduce such idleness?
During a recession, raw materials are tipically available in abundance.
R But, for some reason, some resources are idle.

O Relation with the PPF: the economy is

Example: if resources for the tootbrushes, like synthetic fibers, operating within the curve.
E are idle, then their production would decrease.

C
O  Is productive capacity growing?
N • The capacity to produce goods and services grows rapidly in some countries, expands slowly in others, and declines in
others.
O
Growth of an economy’s capacity. Combinations that are unattainable today will
M become attainable tomorrow.
I
Example: if our economy is growing, we will produce more Effect on the PPF: outward shift of the
C tootbrushes and toothpaste/dental floss in the future. boundary.

S
Economic Systems and Ownership of
Resources
 Traditional System
Indigenous tribes like the Saami
Public Ownership people of Scandinavia

They rely on fishing and

hunting for their existence
 Command System North Korea
Public Ownership
Controlled by a centralized
power (Kim Jong-un)
 Market System Hong Kong
Private Ownership No government
intervention

 Mixed System France

Public & Private Ownership Combination of different types
of economic systems
Resources, Scarcity, Choice and Opportunity
Cost

Unlimited Wants Limited Resources

Choice

• Opportunity cost: Some weeks ago I had to buy a laptop: either a MacBook
Pro or a HP Envy. I ended up buying the HP because it was cheaper. When I
chose the HP, my opporunity cost was the MacBook Pro, that would have a
better graphics.
 Modernization of Economics, Living Standards
and Technology
 Internet and smartphones have changed the world and have improved our living standards.

Information, knowledge and

learning with a click.

Linked with economics

Connectivity, communication and modernization.
sharing in a second.

Banking, bills and shopping. Possibility to buy and sell online.

THANKS FOR READING!

THE END
A project realized by Giovanni
Romano (Windsor Secondary student)