#import "template.typ": *

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#show: project.with(
  title: "Summary of Lecture 1",
  authors: ( "JINHANG",),
  date: "August 21, 2023",
)

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= Definition

  + *Scarce:*
    - Deficient in quantity compared with the demand.
    - Insufficient to satisfy needs or wants.
  + *Economics:* the study of choice under scarcity.
  + *Explicit cost:* monetary sacrifice.
  + *Implicit cost:* non-monetary sacrifice
  + *Microeconomics:* The study of how households and firms make decisions and how they interact in markets
  + *Macroeconomics:* The study of economy-wide phenomena, e.g., inflation, unemployment, and economic growth

= Five Core Principles

#lorem

  + Scarcity Implies Trade-Off
    - unlimited wants 
    - limited resources
    - more of one good thing $equiv$ less of another
  + Bargaining Strength Comes Through Scarcity
  + Compare Costs and Benefits: An action should be taken if, and only if, the benefit is at least as great as the cost.
  + People Respond to Changes in Costs and Benefit
    - benefit $arrow.t$ likehood $arrow.t$
    - cost $arrow.t$ likehood $arrow.b$
  + Focus on Your Comparative Advantage
  
= Economics

  + Positive Economics
    - speaking like a scientist
    - attempt to describe the world as it is
    - addresses the relatively narrow “What is?” question
    - can be answered with the tools of economics
    - NO interjecting any value judgment (whether the particular outcome is desirable or harmful)
  + Normative Economics
    - speaking like a policy advisor
    - attempt to prescribe how the world should be
    - addresses the much broader “What should be?” question
    - answers require value judgements
    - based on an underlying positive analysis
    - involves our view on ethics, religion, and political philosophy
  + Economists Disagree
    - Positive disagreements: differences in scientific judgments
    - Normative disagreements: differences in values
  
= Production Possibilities Frontier

  + *Definition:* a graph that shows all combinations of two goods that can be produced given the available resources and technology
  + *Character: *
    - Moving along a PPF involves shifting resources from the production of one good to the production of the other good.
    - The slope of the PPF indicates the opportunity cost of good x in terms of good y
    - Economic growth shifts the PPF outward
    - If the opportunity cost of a good is constant, the PPF is a straight line. 
    - PPF is concave
      - the opportunity cost of a good rises as the economy produces more of the good
      - different resources are suited for different uses, i.e., different resources have different opportunity costs of producing one good in terms of the other good.

= Gains from Trade

  + Interdependence
  + Specialization and Exchange
  + Production Possibilities in Vietnam
  + Consumption With and Without Trade: Compare consumption without trade to consumption with trade.
    - see how much of each good is produced and traded by each country
    - use the table to calculate consumption with trade
      - produced
      - imported
      - exported
    - compare consumption without trade to consumption with trade
  + Absolute advantage: the ability to produce a good using fewer inputs than another producer. 
    - If each country has an absolute advantage in one good and specializes in that good, then both countries can gain from trade.
    - measures the cost of a good in terms of the inputs required to produce it
  + Comparative advantage: the ability to produce a good at a lower opportunity cost than another producer.
    - Absolute advantage is NOT necessary for comparative advantage!
    - Gains from trade arise from comparative advantage
    - When each country specializes in the good in which it has a comparative advantage $arrow$ total production in all countries $arrow.t$ $arrow$ world’s economic pie $arrow.t$ $arrow$ all countries can gain from trade. 
    - individuals specializing in different goods or services and trading with one another
    
