PowerPoint Lecture Notes for Chapter 02

Thinking Like an Economist Principles of Economics 8th edition, by

N. Gregory Mankiw

Besides introducing students to the economic way of thinking, this chapter introduces the Production Possibilities Frontier, the first of many graphs covered in the textbook. The PPF will be used extensively in Chapter 3 (Interdependence and the Gains from Trade).

It would be helpful to ask your students to bring calculators to class on the day you cover this chapter (as well as Chapter 3).

Economic models

 Diagrams and equations

 Omit many details

 Allow us to see what’s truly important

 Built with assumptions

 Simplify reality to improve our understanding of it