January 23, Friday lectureEconomists may engage in positive analysispositive analysis: anaylsis concerned with what is or normative analysisNormative analysis: analysis concerned with what ought to be.Positive statements are descriptive and can be evaluated as true or false using only data.For example, “after speeding cameras were installed on I-380, the average speed of motorists decreased.” (this may be true or false but there is data to prove either way)Normative statements are prescriptive and involve personal values, so they cannot be evaluated as true or false using only data.For example, “the government should remove the speeding cameras from I-380.”Mainly in this class we use positive statements with data and charts and facts. (General focus )Economics is studied on two levels: microeconomics and macroeconomics.Microeconomics: the study of households and firms make choices, how they interact in markets, and how the government attempts to influence their choices.Economists use the tem household to refer to all individuals occupying a home, and they use the term firm to refer to a company or business that produces and sells goods and/or services; goods are tangible merchandise, such as bottles of shampoo, and services are activities like haircuts.Macroeconomics: the study of the economy as a whole including topics such as inflation, unemployment, and economic growth.Many economic situations have both a micro and macro aspect, and mice and macro are closely intertwined because changes in overall economy arise from the decisions of individual households and firms.Chapter 2: Trade offs, Comparative Advantage and the Market SystemTrade off: that idea that, because of scarcity, producing more of one good or service means producing less of another good or service.First model…Production possibilities frontier (PPF): a curve showing the maximum attainable combinations of two products that may be produced with available recourses and current technologyTechnology refers to the processes used to produce goods and services.The PPF is an economic model used to analyze the trade-offs and opportunity costs that individuals, firms and countries face when deciding hw to use their scarce resourcesCombinations outside the PPF are unattainable, given the available resources and current technologyCombinations inside or on the PPF are attainable give the available resources and technologyCombinations inside the PPF the PPF are inefficient because some resources are not being used (unemployment), so it is possible for the economy to produce more of one good without producing less of the other.Combinations on the PFF are efficient because the maximum output is being obtained from the available resources and current technology, so it is impossible for the economy to produce more of one good without producing less of the other. (trade off)Chapter 1 continued 01/23/2015January 23, Friday lecture Economists may engage in positive analysis positive analysis: anaylsis concerned with what is or normative analysis Normative analysis: analysis concerned with what ought to be.Positive statements are descriptive and can be evaluated as true or false using only data. -For example, “after speeding cameras were installed on I-380, the average speed of motorists decreased.” (this may be true or false but there is data to prove either way) Normative statements are prescriptive and involve personal values, so they cannot be evaluated as true or false using only data. -For example, “the government should remove the speeding cameras from I-380.”Mainly in this class we use positive statements with data and charts and facts. (General focus ) Economics is studied on two levels: microeconomics and macroeconomics. Microeconomics: the study of households and firms make choices, how they interact in markets, and how the government attempts to influencetheir choices. Economists use the tem household to refer to all individuals occupying a home, and they use the term firm to refer to a company or business that produces and sells goods and/or services; goods are tangible merchandise, such as bottles of shampoo, and services are activities like haircuts. Macroeconomics: the study of the economy as a whole including topics such as inflation, unemployment, and economic growth. Many economic situations have both a micro and macro aspect, and mice and macro are closely intertwined because changes in overall economy arise from the decisions of individual households and firms. Chapter 2: Trade offs, Comparative Advantage and the Market System Trade off: that idea that, because of scarcity, producing more of one good or service means producing less of another good or service. First model…Production possibilities frontier (PPF): a curve showing the maximum attainable combinations of two products that may be produced with availablerecourses and current technology Technology refers to the processes used to produce goods and services. The PPF is an economic model used to analyze the trade-offs and opportunity costs that individuals, firms and countries face when deciding hwto use their scarce resources Combinations outside the PPF are unattainable, given the available resources and current technology Combinations inside or on the PPF are attainable give the available resources and technology Combinations inside the PPF the PPF are inefficient because some resources are not being used (unemployment), so it is possible for the economy to produce more of one good without producing less of the other. Combinations on the PFF are efficient because the maximum output is being obtained from the available resources and current technology, so it is impossible for the economy to produce more of one good without producing less of the other. (trade off)