BAEB602                      MICROECONOMICS                          CHAPTER 1INTRODUCTION TO MICROECONOMICSPREPARED BY:Nu...
CHAPTER 1: INTRODUCTION TO MICROECONOMICSLEARNING OUTCOMES                                                                ...
CHAPTER 1: INTRODUCTION TO MICROECONOMICSTOPIC OUTLINES                                                                  T...
CHAPTER 1: INTRODUCTION TO MICROECONOMICSMicro and Macroeconomics                                                         ...
CHAPTER 1: INTRODUCTION TO MICROECONOMICSDefinition Economics                                                             ...
CHAPTER 1: INTRODUCTION TO MICROECONOMICSBasic Economic Concepts                                                          ...
CHAPTER 1: INTRODUCTION TO MICROECONOMICSBasic Economic Concept                                                           ...
CHAPTER 1: INTRODUCTION TO MICROECONOMICSBasic Economic Concept                                                           ...
CHAPTER 1: INTRODUCTION TO MICROECONOMICSIntroduction to Microeconomics                                                   ...
CHAPTER 1: INTRODUCTION TO MICROECONOMICSFundamental of Economic Problems                                                 ...
CHAPTER 1: INTRODUCTION TO MICROECONOMICSTypes of Economic Systems – Capitalistic Economy                                 ...
CHAPTER 1: INTRODUCTION TO MICROECONOMICSTypes of Economic Systems – Socialistic Economy                                  ...
CHAPTER 1: INTRODUCTION TO MICROECONOMICSTypes of Economic Systems – Mixed Market Economy                                 ...
CHAPTER 1: INTRODUCTION TO MICROECONOMICSClass Activity                                                                   ...
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BAEB602 Chapter 1: Introduction to Microeconomics

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BAEB602 Chapter 1: Introduction to Microeconomics

  1. 1. BAEB602 MICROECONOMICS CHAPTER 1INTRODUCTION TO MICROECONOMICSPREPARED BY:Nur Suhaili RamliSchool of Marketing andEntrepreneurship (SoME)FACULTY OF BUSINESS AND MANAGEMENT
  2. 2. CHAPTER 1: INTRODUCTION TO MICROECONOMICSLEARNING OUTCOMES TOPIC At the end of this chapter, students will be able to:  Understand the basic concept of microeconomics  Understand the term of economics  Getting familiar with economics picture such as term, concepts Slide 2 of 17
  3. 3. CHAPTER 1: INTRODUCTION TO MICROECONOMICSTOPIC OUTLINES TOPIC 1.1 Definition Economics 1.2 Micro and Macro Economics 1.3 Basic Economics Concept 1.4 Fundamental of Economics Problem 1.5 Types of Economic Systems – Capitalistic Economy 1.6 Types of Economic Systems – Socialistic Economy 1.7 Types of Economic Systems – Mixed Market Economy Slide 3 of 17
  4. 4. CHAPTER 1: INTRODUCTION TO MICROECONOMICSMicro and Macroeconomics TOPIC  Economics: The study of how individuals and societies use economic resource (limited resources) to produce goods and services to satisfy their unlimited wants.  Microeconomics: The study of economics activities and decision making of a single individual; like a seller, buyer or consumer, film or producer or a government unit or level.  Macroeconomics: The study of the economics activities and decision-making of the economy as a whole. Slide 4 of 17
  5. 5. CHAPTER 1: INTRODUCTION TO MICROECONOMICSDefinition Economics TOPIC  Choices due to the unlimited needs and wants.  What is needs?  "Need" is something that is essential for survival like food, water or shelter.  What is wants?  "Want" is something that you dont really need, but if you had it, it could make your life a bit better. Slide 5 of 17
  6. 6. CHAPTER 1: INTRODUCTION TO MICROECONOMICSBasic Economic Concepts TOPIC  What is markets?  Market is the interplay of all potential buyers and sellers of a particular commodity or service.  Price always refers to the nominal price or real price of an item.  Nominal price: The absolute price, not adjusted for the changing value of money.  Real price: the nominal price adjusted for the changing value of money. Slide 6 of 17
  7. 7. CHAPTER 1: INTRODUCTION TO MICROECONOMICSBasic Economic Concept TOPIC  There are THREE basic assumptions about market participants (buyers & sellers).  Goal-oriented behavior : the behavior of market participants interested in fulfilling their own personal goals.  Rational behavior: The behavior of market participants based on a careful, deliberative process that weighs expected benefits and costs.  Scarce resources: insufficient time, money or other resources for individuals to satisfy all their desires. Slide 7 of 17
  8. 8. CHAPTER 1: INTRODUCTION TO MICROECONOMICSBasic Economic Concept TOPIC  Explicit costs is money used in the pursuit of a goal that could otherwise have been spent on an alternative objective.  Implicit costs is costs associated with the individual’s use of his or her own time and other resources in the pursuit of a particular activity versus alternatives.  Opportunity costs (anything that is forgone or scarified in order to enjoy a commodity  Accounting costs is costs reported in companies’ net income statements generated by accountants. Slide 8 of 17
  9. 9. CHAPTER 1: INTRODUCTION TO MICROECONOMICSIntroduction to Microeconomics TOPIC The problem of scarcity  What is scarcity?  The condition in which human wants are forever greater than the available supply of time, goods, and resources.  There are THREE main categories of resources:  Land  A shorthand expression for any natural resource provided by nature. It include anything natural above or below the ground. E.g Farming, building factories, forests, river, lake, sea, diamond, gold, etc.  Labor  The mental and physical capacity of workers to produce goods and services. E.g the service of farmers, assembly-line workers, lawyers, professional football players.  Capital  The physical plants, machinery, and equipment used to produce other goods. Slide 9 of 17 Topics
  10. 10. CHAPTER 1: INTRODUCTION TO MICROECONOMICSFundamental of Economic Problems TOPIC 1. What and how much to produce? The type of product to produce, the amount of product to be produced. 2. How to produce? The technique or method of producing a product. 3. Whom to produce? Who finally gets to enjoy the goods and services produced. Slide 10 of 17
  11. 11. CHAPTER 1: INTRODUCTION TO MICROECONOMICSTypes of Economic Systems – Capitalistic Economy TOPIC  Capitalistic Economy  Is also known as a free market economy system.  In which no one is told what to do or how to do it, what to produce, who to work for and how to get the things they need.  The forces of market demand and supply is without any government intervention, determines how resources is allocated. Slide 11 of 17
  12. 12. CHAPTER 1: INTRODUCTION TO MICROECONOMICSTypes of Economic Systems – Socialistic Economy TOPIC  Socialistic or Command Economy  The government owns and operates the factors of production.  The government will decide what will be produced , how it will be produced and for whom it will be produced for.  Example of socialism are North Korea, Cuba, Laos, and China.  The motive is to make sure that everything that people need is produced and that everyone gets what they need. Slide 12 of 17
  13. 13. CHAPTER 1: INTRODUCTION TO MICROECONOMICSTypes of Economic Systems – Mixed Market Economy TOPIC  The Mixed Market Economy  Has features of both market and command economies.  Most countries are mixed economies, though some are close to the command economy and others are nearer to the free market economy.  Usually they have a free market, but the government owns some business and provides some goods and services to the citizens  Example are Malaysian, the UK, and Singapore. Slide 13 of 17
  14. 14. CHAPTER 1: INTRODUCTION TO MICROECONOMICSClass Activity TOPIC  Perform a group of 2and identify the following:  What is microeconomics?  Differentiate between microeconomics and macroeconomics  Give one example for each of micro and macro economics.  What is opportunity cost?  Give example of your own of opportunity cost.  Differentiate 3 types of market economy based on definition, characteristics and examples. Slide 14 of 17

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