INTRODUCTORY ECONOMIC TERMS
Positive versus Normative
Economist analyze things in different manners. Some economists choose to look at the
facts that are in front of them, whereas others use their opinion. This concept can be
characterized into two different statements: positive or normative. A positive statement is
a statement of fact. It is backed by research and evidence. A normative statement is a
statement of opinion. Listed below are some sample statements. Can you distinguish
etween a positive and a normative statement?
1. What is the cheapest airfare from Chicago to Dallas?
2. What will happen to the cost of a $100,000 loan if interest rates increase by one percent?
3. Should we subsidize the medical bills of low-income patients so that they can buy AIDs
medication when needed?
4. Should firms be allowed to market products that are very helpful to some but harmful to
others? 5. Should the government adopt policies that cause hardship in the near term but
increase long-term growth?
XXXXXXXXXXWhat will happen to prices in the US economy if some countries
decide not to purchase American made products?
7. Should the government make reducing unemployment its primary
policy goal?
Answers: Positive, positive, normative, normative, normative, positive, normative.
Wants versus Needs
As consumers, we all have to consider the things we want versus the
things we need. Wants are known as unlimited dersires. Needs are the
things that we need in order to survive. Our basic economic needs are
food, shelter, and clothing. Wants, on the other hand, are unlimited.
What are some things that you want?
THE ECONOMIC PROBLEM
The goal of economics is to satisfy our wants by utilizing our resources wisely. We have already defined wants, but what are resources? Resources are also known as the factors of production. There are five:
· Land-Raw materials-gifts of nature that are used to produce goods and services.
· Labor-Productive skills-time and effort people put into producing goods and services
· Physical capital-factories and equipment
· Human capital-education and training of workers-the skill and knowledge of people that arise from education and on the job training. It improves the quality of labo
· Entrepreneurship-They come up with new ideas about what, how, when, and where to produce, and make the key business decisions.
Now that we know what resources are, let's take a look at the economic problem. The economic problem is that we have unlimited wants with limited resources. The economic problem is also known as scarcity. Scarcity exists when our wants exceed our resources. Does everyone experience scaricty? Yes. Even the rich. What are some things that are scarce in your life?
When we deal with scarcity, we have to make choices. In economics, we call those choices opportunity costs. Opportunity costs are a trade off. It is the next best alternative. There is something else you could be doing instead of reading this lesson. Whatever you could be doing is your opportunity cost. For instance, instead of reading this lesson, you could be asleep, or watching T.V. What is your opportunity cost of taking this course?
Click on this link to learn about the production possibilities curve.
Document: Production Possibilities PP
INTRODUCTION TO ECONOMICS
Economics is the study of decisions made by individuals, businesses, and the
government. It can be
oken down into two types: microeconomics and
macroeconomics. Microeconomics examines the decisions made by
individuals and firms. Macroeconomics studies the economy as a whole. How
can you distinguish between the two types? Well, you make economic
decisions every day. One decision you all have made is to go to college.
Going to college will assist you in obtaining a better paying job, which will
also contribute to decreasing the unemployment rate.
Key Economic Ideas There are three key economic ideas that we
as individuals use on a regular basis:
XXXXXXXXXXPeople Respond to Economic Incentives. Have you ever
wondered why there is a sign at the drive thru window of a
estaurant that states: “If we fail to give you a receipt, we will
give you $5.00.” The company is trying to give their workers
an incentive to be honest. If the employee is forced to give
each customer a receipt, the employee will more than likely be
honest.
People make decisions on the margin. When individuals
think on the margin, they will ask themselves questions
like: What is the additional cost or benefit you will receive if
you make that decision? What additional benefit will I receive
if I spend less money and save more? For example, if I hire
another person in my business, how many additional sweaters
will they make a day? What are the additional costs
associated with hiring that extra person?
People Are Rational. Individuals analyze the costs against
the benefits. If the benefits outweigh the costs, then the
individual will choose that action. For example, say you are
oke. You do not have a dime to your name. What would be
the rational thing to do? Go find a job, right? An i
ational
thing would be to rob the bank. The costs definitely outweigh
the benefits in that situation.
MICRO VERSUS MACRO
ARE THESE STATEMENTS MACRO OR
MICRO
Test your knowledge of macroeconomics versus microeconomics by
analyzing the statements below.
1. Consumers purchase goods and services.
2. Panasonic advertises to generate demand for its
electronic products.
3. Starting first job today, thereby lowering U.S.
unemployment rate.
4. Taxicab drivers supply labor in return for wages.
5. High interest rates make paying off student loans
more expensive than expected.
6. Drivers pay high gas prices due to U.S. dependence
on foreign oil.
Peer Reviewed References Defined
Peer review isn't a tough concept. It just means that the article was reviewed by scholars and meets certain standards with regards to a publication or a discipline
Peer reviewed/scholarly articles are typically written by professors or specialists.
A great clue that something is peer reviewed or scholarly: The article contains a list of references or cites.
How to recognize peer-reviewed (refereed) journals
In many cases professors will require that students utilize articles from “peer-reviewed” journals. Sometimes the phrases “refereed journals” or “scholarly journals” are used to describe the same type of journals. But what are peer-reviewed (or refereed or scholarly) journal articles, and why do faculty require their use?
Three categories of information resources:
· Newspapers and magazines containing news - Articles are written by reporters who may or may not be experts in the field of the article. Consequently, articles may contain inco
ect information.
· Journals containing articles written by academics and/or professionals — Although the articles are written by “experts,” any particular “expert” may have some ideas that are really “out there!”
· Peer-reviewed (refereed or scholarly) journals - Articles are written by experts and are reviewed by several other experts in the field before the article is published in the journal in order to insure the article’s quality. (The article is more likely to be scientifically valid, reach reasonable conclusions, etc.) In most cases the reviewers do not know who the author of the article is, so that the article succeeds or fails on its own merit, not the reputation of the expert.
Helpful hint!
Not all information in a peer-reviewed journal is actually refereed, or reviewed. For example, editorials, letters to the editor, book reviews, and other types of information don’t count as articles, and may not be accepted by your professor.
How do you determine whether an article qualifies as being a peer-reviewed journal article?
First, you need to look for actual articles, excluding those types of information that are not. Then, you need to be able to identify which journals are peer-reviewed. There are generally four methods for doing this:
1. Limiting a database search to peer-reviewed journals only.
Some databases allow you to limit searches for articles to peer reviewed journals only. For example, Academic Search Premier has this feature on the initial search screen - click on the pertinent box to limit the search. In some databases you may have to go to an “advanced” or “expert” search screen to do this. Remember, many databases do not allow you to limit your search in this way.
2. Checking in the database Ulrichsweb.com to determine if the journal is indicated as being peer-reviewed.
If you cannot limit your initial search to peer-reviewed journals, you will need to check to see if the source of an article is a peer-reviewed journal. This can be done by searching the database Ulrichsweb.com. From the Online Resources box in RamPort, go to the alphabetical listing of databases and click on the “U”. Select Ulrichsweb.com. Choose the Quick Search for “Title (Exact)”. Type in the EXACT title of the source journal. (Note: in Ulrichsweb.com, unlike most other databases, you must type the exact title INCLUDING ANY INITIAL A, AN, or THE in the title. For example, searching for The Chronicle of Higher Education as “Chronicle of Higher Education” is inco
ect – the initial “The” must be included.) If the original search is not successful, you may want to try an additional Quick Search using the “Title (Keyword)” option. If the journal you are interested in is not found, you will need to utilize Method C below. If your journal title IS displayed, check to see if the journal is indicated as being refereed by having the symbol next to the title.
3. Examining the publication to see if it is peer-reviewed.
If by using the first two methods you were unable to identify if a journal (and an article therein) is peer-reviewed, you may then need to examine the journal PHYSICALLY to determine if it is peer-reviewed. This method is not always successful with resources available only online, and is not recommended in this latter situation. The following steps are suggested:
1. Locate the journal in the Li
ary, and remove the most cu
ent entire year’s issues from the shelf.
2. Locate the masthead of the publication. This oftentimes consists of a box towards either the front or the end of the periodical, and contains publication information such as the editors of the journal