Title: Understanding Basic Microeconomics: Key Concepts and Factors in Production
Microeconomics forms the foundation of economic analysis at the individual and small-scale level. It examines the behavior of consumers and firms, market interactions, and factors influencing production. This presentation aims to provide a comprehensive overview of basic microeconomic concepts, essential terms, and the pivotal factors affecting production.
**Section 1: Microeconomic Fundamentals**
* **1.1 Scarcity and Choice:**
- Definition of scarcity and its role in decision-making.
- The concept of opportunity cost and its significance in making choices.
* **1.2 Supply and Demand:**
- Explanation of the law of demand and the law of supply.
- Understanding equilibrium price and quantity in a market.
* **1.3 Elasticity:**
- Differentiating between price elasticity of demand and price elasticity of supply.
- Calculating and interpreting elasticity coefficients.
**Section 2: Basic Microeconomic Terms**
* **2.1 Utility:**
- Defining utility and its relation to consumer choices.
- Discussing marginal utility and the law of diminishing marginal utility.
* **2.2 Production Possibility Frontier (PPF):**
- Introduction to the PPF and its representation.
- Illustrating trade-offs, opportunity costs, and economic efficiency using the PPF.
* **2.3 Marginal Analysis:**
- Exploring marginal cost and marginal benefit in decision-making.
- Examples of how firms and individuals use marginal analysis.
**Section 3: Factors Affecting Production**
* **3.1 Land:**
- Defining land as an economic resource.
- Exploring the concept of rent and its determination.
* **3.2 Labor:**
- Discussing the role of human capital in the labor market.
- Analyzing wage determination and the impact of supply and demand on wages.
* **3.3 Capital:**
- Defining physical and human capital in the production process.
- Understanding the concept of interest and its role in the economy.
* **3.4 Entrepreneurship:**
- Highlighting the importance of innovation and risk-taking.
- Exploring the rewards of entrepreneurship and their connection to profit.
**Section 4: Market Structures and Production**
* **4.1 Perfect Competition:**
- Describing the characteristics of a perfectly competitive market.
- Analyzing the efficiency and pricing behavior of firms in perfect competition.
* **4.2 Monopoly:**
- Defining monopoly and its characteristics.
- Discussing the trade-offs between monopoly power and market efficiency.
* **4.3 Oligopoly and Monopolistic Competition:**
- Explaining the features of oligopolistic and monopolistically competitive markets.
- Illustrating product differentiation and pricing strategies.
**Conclusion:**
Microeconomics lays the groundwork for understanding individual and firm behavior within the broader economic landscape. The concepts of scarcity, supply and demand, elasticity, and factors of production
2. What we'll discuss
Basic terms in Economics
Economic Resources
The Need to Choose
Types of Economic Systems
3. LEARNINGOBJECTIVES
LEARNINGOBJECTIVES
Identify the basic
terms in Economics,
the different
Economic Resources,
and the different
types of Economic
Systems.
Develop a clear
understanding of the
concept of scarcity,
which highlights the
limited nature of
economic resources
relative to unlimited
human wants.
Gain insights
about the price
system and its
role in the basic
Economic
Problems.
4. "Economics is an equity
"Economics is an equity
into the nature and
into the nature and
causes of the wealth of
causes of the wealth of
the nations."
the nations."
Adam Smith
6. Father of the Modern Economics.
An 18th-century Scottish economist,
philosopher, and author.
Argued against mercantilism and was
a major proponent of laissez-faire
economic policies.
Proposed the idea of an invisible hand
Known for creating the concept of
gross domestic product (GDP)
Most famous for his 1776 book, The
Wealth of Nations.
8. Economics
The study of production, distribution,
selling, and use of goods and
services and analyzes the choices
that individuals, businesses,
governments, and nations make to
allocate resources.
9. Goods
Basic Terms in Economics
Good
1.
Anything which yields satisfaction to someone.
Tangible Intangible
10. Classification of Goods according to use
Consumer Goods
Luxury Goods
Economic Goods
Free Goods
Essential Goods
11. Goods are created by means
of production.
Manufacturing or
Industry
Agricultural
13. ECONOMIC
RESOURCES
LAND
All natural resources which are given and
found in nature; not man-made.
The less the supply for a man's use, the
higher is the rent that has to be paid for it.
Includes soil, forests,
rivers, and mineral
deposits.
14. ECONOMIC
RESOURCES
LABOR
Any form of human efforts exerted in the
production of goods and services.
Covers a wide range of skills, abilities,
and characteristics.
Includes factory
workers, nurse,
accountant, typist,
economist, etc.
15. ECONOMIC
RESOURCES
CAPITAL
Man-made goods used in the production
of goods and services.
A nation's capital is dependent on its
level of savings.
Includes buildings,
machinery, raw materials,
and other physical
necessities.
17. RENT — To grant the possession and enjoyment of (property, machinery,
etc.) in return for the payment of rent from the tenant.
SAVINGS — Part of a person's income which is not spent on consumption.
INTEREST — Fee paid for the use of ones money.
PROFIT — Amount left after all the allocations to the other economic
resources have been made.
23. The 3 Fundamental and
Interdependent Economic
Problems
What to produce and how much?
How shall goods be produces?
For whom shall goods be produced?
1.
2.
3.
24. Types of Economic Systems
Types of Economic Systems
TRADITIONAL ECONOMY
1.
A subsistence economy wherein
a family produces everything that it
consumes. This type of economic
system is very backward since it
doesn't allow for change.
25. 2. COMAND ECONOMY
The means of production are owned
by the government. It’s decisions
are arrived at by planners or
government men who dictate what,
how, and for whom to produce.
26. 3. MARKET ECONOMY
Resources are privately owned and
decisions are made by the people
themselves. The system depends
on prices set by the conditions of
demand and supply.
27. Demand for goods
and services
GOODS
MARKET
Supply of goods
and services
Costs of Production
Producers
Peso votes
Consumers
Resouces Owners
Capital
Labor
Land
RESOURCE
MARKET
Capital
Labor
Land
Figure1.1 The Price System and its Role in the Basic Economic Problems
