2TheScientificMethod:Observation,Theory,andMoreObservationTheRoleofAssumptionsEconomicModelsOurFirstModel:TheCircular-FlowDiagramFigure1TheCircularFlowOurFirstModel:TheCircular-FlowDiagramOurFirstModel:TheCircular-FlowDiagramOurFirstModel:TheCircular-FlowDiagramOurSecondModel:TheProductionPossibilitiesFrontierFigure2TheProductionPossibilitiesFrontierOurSecondModel:TheProductionPossibilitiesFrontierFigure3AShiftintheProductionPossibilitiesFrontierMicroeconomicsandMacroeconomicsTHEECONOMISTASPOLICYADVISORPOSITIVEVERSUSNORMATIVEANALYSISPositiveorNormativeStatements?Anincreaseintheminimumwagewillcauseadecreaseinemploymentamongtheleast-skilled.POSITIVEHigherfederalbudgetdeficitswillcauseinterestratestoincrease.POSITIVEPositiveorNormativeStatements?Theincomegainsfromahigherminimumwageareworthmorethananyslightreductionsinemployment.NORMATIVEStategovernmentsshouldbeallowedtocollectfromtobaccocompaniesthecostsoftreatingsmoking-relatedillnessesamongthepoor.NORMATIVEEconomistsinWashingtonEconomistsinWashingtonWHYECONOMISTSDISAGREETable2TenPropositionsaboutWhichMostEconomistsAgree美国和日本工人每人每年可以生产4辆汽车。一个美国工人1年可以生产10吨粮食，而一个日本工人1年可以生产5吨粮食。假设每个国家有1亿工人，他们能以不变的比例在一种物品与另一种物品之间进行转换。1、画出日本和美国的生产可能性边界。2、美国和日本生产一辆汽车的机会成本分别是多少?粮食呢？3、没有贸易时，每个国家有一半工人生产汽车，一半工人生产粮食。每个国家能生产和消费多少汽车和粮食？4、若美国专门生产粮食，日本专门生产汽车，并且日本以1亿辆车交换2亿吨粮食，两国各生产和消费多少汽车和粮食？InterdependenceandtheGainsfromTradeInterdependenceandtheGainsfromTradeInterdependenceandtheGainsfromTradeAPARABLEFORTHEMODERNECONOMYTable1TheProductionOpportunitiesoftheFarmerandRancherProductionPossibilitiesFigure1TheProductionPossibilitiesCurveFigure1TheProductionPossibilitiesCurveThefarmershouldproducepotatoes.Theranchershouldproducemeat.Table2TheGainsfromTrade:ASummaryFigure2HowTradeExpandstheSetofConsumptionOpportunitiesFigure2HowTradeExpandstheSetofConsumptionOpportunitiesTable2TheGainsfromTrade:ASummaryWhocanproducepotatoesatalowercost--thefarmerortherancher?THEPRINCIPLEOFCOMPARATIVEADVANTAGEAbsoluteAdvantageTheRancherhasanabsoluteadvantage