ECON 105 Lecture Notes - Lecture 2: Capital Formation, Microeconomics, John Maynard Keynes

• School: Simon Fraser University
• Department: Economics
• Course: ECON 105
• Professor: Junjie Liu

Document Summary

Topics covered: assumptions and models, circular- flow diagram, production possibilities frontier (ppf, positive and normative analysis, disagreement among economists. Two roles played by economists: scientists: try to explain the world, policy advisors: try to improve the situation, as scientists, economists make positive statements, as policy advisors, economists make normative statements. The scientific method: observations, theory, and more observation. When you use economic models, there are many, but are built with different assumptions. Answer: no, it is not possible for an economy to produce 300 computers and 3500 tons of wheat at the same time because there are not enough resources. Any point outside the ppf is not possible. The ppf: what we know so far: points of the ppf (like a to e, possible, efficient: all resources are fully utilized, points under the ppf (like f, possible. Inefficient: some resources are underutilized: example: some workers are unemployed, some factories are idle, points above (like g, not possible.