1. What do economists study? Key questions
   1. Economics is a social science
   2. What is being produced
   3. For whom
   4. With what resources
2. Mexican food riot example
   1. Oil prices increased
      1. Other effects of this e.g. Hybrid vehicles
      2. Oil producer states have more buying power, importers less
      3. Less oil intensive products produced
      4. Less oil intensive techniques used
   2. Corn production switched to ethanol
   3. Tortilla flour price increased
3. Central economic problem
   1. Scarcity is unlimited wants but limited resources
   2. Opportunity cost
      1. No such thing as a free lunch
4. Production possibility curve/frontier
   1. For each level of output of a PPC shows the maximum output of b
   2. Moving the frontier out is "growth"
   3. Production under the curve is not using all resources.
      1. E.g. Unemployment would put us under the curve
   4. Production above curve requires new additional resources or technological breakthrough
   5. Moving along the PPC shows the opportunity cost of such a change
      1. Steeper slope means increasing opportunity cost of each change
5. Economic system
   1. Resource allocation is done in diffent ways in different societies
      1. Planned economy at one extreme
         1. Bureaucrats make the allocation deciions
            1. Nth korea
            2. Cuba
            3. Soviet system
      2. Free Market economy at the other extreme
         1. Markets decide as much as possible
            1. E.g Hong Kong
            2. 19th century USA
         2. Resource allocation via market
            1. Household decisions about consumption and alternatives
            2. Firms decisions about what to. Produce and how
            3. Work decisions to work or not
            4. Is supposed to ration goods and services by voluntary exchange
            5. But governments often intervene e.g price control
            6. E.g. A fixed maximum price of something will reduce production
      3. Mixed economies somewhere in between
         1. Many economies have been moving more toward Market economy over past thirty years
            1. Still some big sectors negate control. Eg NHS, education, transport infrastructure, justice
6. Efficiency/equity
   1. Efficiency (Pareto)
      1. Anything on the PPC are Pareto efficient - you can't increase one without decreasing anotheer
      2. Under the PPC is not efficient as you could increase productions without affecting another industry etc
   2. Equity
      1. Smething mint be efficient but not just from a social perspective etc
         1. So. Look for mechanisms to move to more equitable positiowithout also sacrificing efficiency
7. Normative/positive
   1. Positive statement: next year govt has increased the cost of university. I.e it is a fact
   2. Normative statement : government ought to increase the cost of education
   3. I.e. The "is/ought problem"