C:\fakepath\chapter one basics of micro economics
ppt on Introduction to Economics concepts
- 1. Economics- The world Around you
2. EXAMPLES OF SOME ECONOMIC DECISIONS
- Whether to buy a car this week.
- Whether to have pizza for dinner tonight, or something else.
- How hard to study for this course.
- Whether to go to college, and if so, which one.
- Whether to buy a Ticket for the movie.
slide 3. Definition of Economics
- Economicsis the study of how scarce resources are allocated among unlimited wants.
- To understand this definition, we must examine the concepts ofscarcity , andeconomic choice
4. Human Nature and Reality
- People haveunlimited wants .
- People havelimitedresources to acquire the things they want.
- As a result, they must makechoices .
- Choices involve pursuing some things whileforgoingothers.
5. Scarcity, Goods and Bads
- An item that costs something is calledscarce .
- Anything with a price on it is called aneconomic good these includegoodsandservices .
- Afree goodis a good for which there is no scarcity.
- Aneconomic badis anything you want to get rid of (pollution, disease, garbage)
6. Clarifying Concepts
- Scarcitymeans that not enough is available for free.
- Ashortageoccurs when not enough is available at the current price.A shortage is a problem of price .
- Povertyoccurs when the goods are scarce, and those who need them do not have the income to obtain them.Poverty is a problem of income .
7. Goods to Produce Goods
- Resourcesare the elements needed toproduce goods. Resources are also called
- Land (includes natural resources)
- Labor (physical and intellectual services of people)
- Capital (plant, machinery, equipment used in production)
8. Resources in Production Producers of Goods Resource Suppliers land labor capital rent wages interest 9. Scarcity and Choice
- Scarcitynecessitates makingchoices .
- Economics is the study of how people choose to use their resources in attempts to satisfy their unlimited wants.
10. Positive vs. Normative Economics
- Analyzes actual, measurable outcomes.
- Doesnotimpose value judgments, person feelings or convictions.
- Positive economics is economics as a science.
- Focuses on what someone thinksought to beorshould be .
- Makes ethical judgmentsvalue judgments.
11. Common Analytical Mistakes (Logical Fallacies)
- The mistaken assumption that what is true of a part is also true of the whole.
- Association is not Causation
- The mistaken assumption that because two events occur together, one must cause the other. Also given as correlation is not causation.
- Violation ofCeteris Paribus
- Ceteris Paribus: Latin for all else equal.
- This occurs when one attempts to analyze the effect of one thing while holding everything else constant, when in fact other thingshavechanged.
12. Micro vs. Macro
- Studies the economy at the level of individual consumers, workers, firms, goods, and markets
- Studies the economy at the aggregate level, at the level of the economy as a whole.
- Examines total consumer behavior, total employment, total production, total sales, etc.
13. Micro Economics
- Definition- Studying a part of economy, a unit or particular, specific aspects
- Determination of individual prices
- Immediate disposal of the problem
- Immediate decisions are possible
14. Need and Significance
- Essential for understanding total economic system
- Helpful in- solving of economic problems
- Economic decision of individual unit
- Enquiring about economic welfare
- Theory of Product Pricing
- Theory of economic welfare
- Study of industrial units only
- Study of a part of economy only
- Few specific problems only
- Limited study of economic problems
- Study of whole economy system
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