Thinking Question:
Why are some countries and
people wealthy and some
not?
Adam Smith
 Among the first to
consider this question
was the philosopher
Adam Smith.
 Known as ‘the father of
modern economics”.
 Wrote The Wealth of
Nations.
 Developed an economic
way of thinking.
What is economics all
about?
1. Explores everyday mysteries and
economic enigmas-puzzles or riddles
that might be explained through
economic analysis.
“..it is about observing the world with genuine
curiosity and admitting that it is full of
mysteries…”
Steven Landsburg
The Armchair Economist
Every man is rich or poor according to the
degree in which he can afford to enjoy
the necessaries, conveniences, and
amusements of human life.
-Adam Smith-
Think-Pair-Share
Working with a partner write a simple
statement about what you think the quote
means. 10 mins.
Takeaway
Adam Smith was not the first to explore
everyday economic events but developed
an economic way of thinking and the
more you learn how to think like an
economist the better you will be at
making sound decisions in almost every
aspect of your life.
What is economics all
about?
Economics “is about stripping a layer or
two from the surface of life and seeing
what is happening underneath.”
-Steven LevittFreakonomics
What is Economics All
About?
1.
2.
3.
4.
Explores everyday
mysteries and economic
enigmas-puzzles or riddles
Explores how people use
limited resources to satisfy
unlimited wants.
The science of decision
making.
Explores what is and what
should be.
Positive vs. Normative
Economic Enigmas
 Do cross walk button really work?
 Why do the keypad buttons on drive up cash machines have
Braille dots?
 Why is milk sold in rectangular containers while soda is sold in
round ones?
 Why are DVDs sold in larger packages than CDs when the disc is
the same size?
 Why does Apple sell its black laptops for $150 more than the
identically configured white ones? Why are seat belts required in
cars but not school buses?
 Why is it legal to drive while eating a cheeseburger or drinking
coffee but illegal while talking on a cellphone?
 Why do most stores place men's fashion on the lower floors and
women's fashions on the higher floors?

What Seven Principles Guide an Economic Way
of Thinking?
 Scarcity-forces
tradeoffs principle:
Limited resources
force people to make
choices and face
tradeoffs when they
choose.
What Seven Principles Guide an Economic Way
of Thinking?
 Cost-versus-benefits principle: People
choose something when the benefits of
doing so are greater than the costs.
What Seven Principles Guide an Economic Way
of Thinking?
 Thinking-at–the-margin principle: most
decisions involve choices about a little
more or a little less of something.
What Seven Principles Guide an Economic Way
of Thinking?
 Incentives-matter principle: People
respond to incentives in generally
predictable ways.
What Seven Principles Guide an Economic Way
of Thinking?
 Trade-makes-people-better-off principle:
By focusing on what we do well and then
trading with others, we will end up with
more and better choices than by doing
everything for ourselves.
What Seven Principles Guide an Economic Way
of Thinking?
 Markets-coordinate-trade principle:
Markets usually do better than anyone or
anything else at coordinating exchanges
between buyers and sellers.
What Seven Principles Guide an Economic Way
of Thinking?
 Future-consequences-count principles:
Decisions made today have future (and
often unintended) consequences.
What is economics all
about?
2. Explores how people use limited
resources to satisfy unlimited wants.
Resource- anything used to produce an
economic good or services.
What is economics about?
3. The science of decision making.
4. Explores what is and what should be.
Positive vs. Normative
Positive economics describes how
things are.
Normative focuses on how things ought
to be.
Bell Work
 Write the key terms in your notebook on
page 11 (right side) of your notebook.