Welcome to day two of the Mini Bootcamp. This session looks at economic thinking and ideas that can be applied to everyday decisions, using examples and case studies to explain key concepts.
Session overview
The session explores foundational economic ideas that can help people analyze situations and make decisions.
Content and slides
The session uses more than 150 slides to cover a range of topics and economic principles.
Nobel Prize economics
It introduces theories associated with Nobel Prize-winning economists and their role in economic thought.
Mental Model 1: Scarcity
Scarcity is a central idea in economics.
What scarcity means
Resources are limited while human wants are unlimited.
Products that use scarcity
Rare or limited-quantity products are examples of how scarcity can affect decisions.
“Ending soon” and a sense of urgency
Marketing may use “ending soon” messages to create urgency and encourage consumers to buy.
Online courses and abundance
Digital access has made online courses more numerous and easier to reach, illustrating abundance.
Xiaomi and urgency
The session gives Xiaomi as an example of using urgency to encourage sales.
Marketing and economics
Marketing and economics are connected; marketing can use economic ideas to create demand and encourage consumption.
Need, Want, and Demand
The session distinguishes needs, wants, and demand.
What is a need?
A need is a basic requirement for living, such as food or shelter.
What is a want?
A want is a personal desire that is not essential for living, such as a luxury car.
What is demand?
Demand is a want backed by purchasing power: the person is both willing and able to pay.
Mental Model 2: Opportunity Cost
Opportunity cost is the value of the alternative given up when making a choice.
Examples of opportunity cost
Everyday decisions involve giving up other uses of time or resources.
A job interview and opportunity cost
Attending a job interview uses time that could have been spent on another activity.
Studying abroad and cost
Studying abroad involves both direct expenses and opportunity costs.
What is financial cost?
Financial cost is a money expense, such as food or transportation.
What is economic cost?
Economic cost includes financial cost and opportunity cost.
Construction and externalities
This section connects construction with the idea of externalities.
Construction and externalities
Construction concerns building activity; externalities are effects on others that arise from production or consumption.
Global warming and the free-rider problem
Global warming is used as an example of an externality affecting everyone, alongside the free-rider problem.
Mental Model 3: Production Possibility Frontier (PPF)
The PPF represents production limits given available resources and technology.
Points that cannot be produced on the PPF
The session considers why some combinations of output are unattainable with current resources.
Expanding the PPF
It looks at factors that can increase productive capacity and move the frontier outward.
What is capital?
Capital means resources used in production, such as machinery and factories.
Mental Model 4: Specialization
Specialization means focusing on producing goods or services in which a person or country has an advantage or expertise.
What is specialization?
Individuals or countries concentrate on producing goods or services they are well suited to make.
Adam Smith and The Wealth of Nations
The session links the idea of specialization with Adam Smith and The Wealth of Nations.
Gains from trade
Trade can create gains when parties specialize and exchange with one another.
Globalization: effects and arguments
Globalization connects economies across the world, with both potential benefits and drawbacks.
What is globalization?
Globalization is the growing connection and interdependence of the world’s economies.
Benefits and drawbacks of globalization
The session considers both positive and negative effects of globalization.
DEFA (Digital Economy Framework Agreement)
The session introduces the Digital Economy Framework Agreement.
What is DEFA?
DEFA stands for Digital Economy Framework Agreement, a framework for cooperation on the digital economy.
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