Simple Economic Models - Topics for Further Study

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TOPICS FOR FURTHER STUDY

1. How would the circular flow diagram change if it also included government? What other flows could be added to make it more realistic?

2. Could a production possibilities curve be concave to the origin? Would the opportunity costs be increasing, decreasing, or constant?

3. Draw a production possibilities frontier for the example on page 54.

4. Draw a production possibilities frontier for the example on page 55.


6 hours x 20 pages of economics per hour = 120 pages of economics
6 hours x 50 pages of history per hour = 300 pages of history
4 hours x 20 pages of economics per hour = 80 pages of economics
4 hours x 50 pages of history per hour = 200 pages of history
6 hours x 20 pages of economics per hour = 120 pages of economics
6 hours x 50 pages of history per hour = 300 pages of history
4 hours x 20 pages of economics per hour = 80 pages of economics
4 hours x 50 pages of history per hour = 200 pages of history
5 hours x 50 pages of history per hour = 250 pages of history
5 hours x 30 pages of economics per hour = 150 pages of economics

Simple Economic Models

When developing their perspectives on social policies, economists sometimes use models, which range from extremely simplistic to tremendously complex. Some of the most basic economic principles can be illustrated with relatively simple and straightforward models. Introductory economics courses focus on these simple models.

Paper airplane models make extremely simplifying assumptions about the real world to illustrate basic principles that underlie complex phenomena. Economists use models to help understand the complexities of economic issues. Particularly in introductory economics, these models are extremely simplistic and do not resemble the real world. This does not mean we cannot learn basic economic principles from them, however.

Simple Economic Models - Topics

Click on the hyperlinks below to go to a portion of the blog devoted to that topic:

Simple Economic Models - Learning Objectives
Simple Economic Models
The Circular Flow Diagram
The Production Possibilities Frontier (PPF)
A PPF with Constant Opportunity Costs
Movements of the Production Possibilities Frontier
An Increase in Resources
A Decrease in Resources
Technological Innovation
A PPF Change that only Shifts One Intercept
A PPF with Increasing Opportunity Costs
An Increase in Resources
A Decrease in Resources
Technological Innovation
A PPF Change that only Shifts One Intercept
Using a PPF to Illustrate the Benefits of Specialization and Trade
Topics for Further Study