This document provides an introduction to economics concepts. It discusses how economics seeks to understand how limited resources are used to satisfy unlimited human wants. It also summarizes the key questions of what, how, when, where, and for whom goods and services are produced. The document introduces microeconomics, macroeconomics, and the fundamental concepts of opportunity costs, production possibilities frontiers, marginal costs, and marginal benefits. It explains how economics analyzes human decision-making and tradeoffs between alternatives.
This document outlines 12 key elements of economics according to Common Sense Economics. It discusses how incentives matter in economic decision making and that there is no such thing as a free lunch due to scarcity. It also explains that decisions are made at the margin, and that trade promotes economic progress through specialization and comparative advantage. Additionally, it covers how transaction costs can be obstacles to trade, and how prices bring buyers and sellers into balance through supply and demand. Profits direct business activities, and people earn income by providing valuable goods and services to others. Economic progress occurs through investment, innovation, and strong institutions. The invisible hand of the market and supply/demand forces generally promote societal welfare. Secondary effects of actions should also be considered
This chapter introduces some of the key principles of economics. It discusses that economics addresses questions about how societies manage scarce resources. It explores four main principles: how people make decisions, how people interact, how markets usually provide a good way to organize economic activity, and how governments can sometimes improve market outcomes. The chapter provides examples and discussion of opportunity costs, incentives, trade, and the role of prices in allocating resources. It also addresses how a country's standard of living depends on its ability to produce goods and services.
This document provides an overview of key economic concepts through three sections. Section 1 defines economics as dealing with scarcity, where limited resources require people and societies to make choices. The factors of production - land, labor, and capital - are introduced. Section 2 discusses opportunity costs and how individuals and groups must consider trade-offs. A production possibilities curve is introduced to show the alternatives available to a nation based on its resources and is the topic of Section 3, which also addresses efficiency, growth, and opportunity costs. Technology is noted as something that can increase a nation's production capabilities.
ten principles of economics, basics of economics,economicsRAHUL SINHA
short notes on chapter 1 of economics book by mankiw
topics covered
What is economics?
HOW PEOPLE MAKE DECISIONS
HOW PEOPLE INTERACT
HOW THE ECONOMY AS A WHOLE WORKS
This document discusses key concepts in economics including:
1. It defines economics as the study of how scarce resources are used to satisfy unlimited human wants.
2. It illustrates the production possibility curve to show the tradeoffs between producing different goods with limited resources.
3. It provides an overview of different economic systems and how resources are allocated in each.
The document discusses fundamental economic concepts. It defines economics as the study of meeting unlimited wants with scarce resources. It explains that economies allocate scarce resources to meet unlimited demands and that different economies do this in various ways, such as the US and Cuba. The purpose of economics is to describe, analyze, explain, and predict economic activity. Scarcity is identified as the biggest economic problem, as resources are scarce but wants are unlimited. Factors of production and the three basic economic questions are also outlined.
This chapter introduces economics and distinguishes between microeconomics and macroeconomics. Microeconomics seeks to understand what goods are produced, how they are produced, and who gets them. Macroeconomics focuses on determining the standard of living, cost of living, and reasons for economic fluctuations. The economic way of thinking emphasizes scarcity, choice, tradeoffs and opportunity costs. Economists make positive statements using observation, models, and theories to understand economic behavior.
This document outlines 12 key elements of economics according to Common Sense Economics. It discusses how incentives matter in economic decision making and that there is no such thing as a free lunch due to scarcity. It also explains that decisions are made at the margin, and that trade promotes economic progress through specialization and comparative advantage. Additionally, it covers how transaction costs can be obstacles to trade, and how prices bring buyers and sellers into balance through supply and demand. Profits direct business activities, and people earn income by providing valuable goods and services to others. Economic progress occurs through investment, innovation, and strong institutions. The invisible hand of the market and supply/demand forces generally promote societal welfare. Secondary effects of actions should also be considered
This chapter introduces some of the key principles of economics. It discusses that economics addresses questions about how societies manage scarce resources. It explores four main principles: how people make decisions, how people interact, how markets usually provide a good way to organize economic activity, and how governments can sometimes improve market outcomes. The chapter provides examples and discussion of opportunity costs, incentives, trade, and the role of prices in allocating resources. It also addresses how a country's standard of living depends on its ability to produce goods and services.
This document provides an overview of key economic concepts through three sections. Section 1 defines economics as dealing with scarcity, where limited resources require people and societies to make choices. The factors of production - land, labor, and capital - are introduced. Section 2 discusses opportunity costs and how individuals and groups must consider trade-offs. A production possibilities curve is introduced to show the alternatives available to a nation based on its resources and is the topic of Section 3, which also addresses efficiency, growth, and opportunity costs. Technology is noted as something that can increase a nation's production capabilities.
ten principles of economics, basics of economics,economicsRAHUL SINHA
short notes on chapter 1 of economics book by mankiw
topics covered
What is economics?
HOW PEOPLE MAKE DECISIONS
HOW PEOPLE INTERACT
HOW THE ECONOMY AS A WHOLE WORKS
This document discusses key concepts in economics including:
1. It defines economics as the study of how scarce resources are used to satisfy unlimited human wants.
2. It illustrates the production possibility curve to show the tradeoffs between producing different goods with limited resources.
3. It provides an overview of different economic systems and how resources are allocated in each.
The document discusses fundamental economic concepts. It defines economics as the study of meeting unlimited wants with scarce resources. It explains that economies allocate scarce resources to meet unlimited demands and that different economies do this in various ways, such as the US and Cuba. The purpose of economics is to describe, analyze, explain, and predict economic activity. Scarcity is identified as the biggest economic problem, as resources are scarce but wants are unlimited. Factors of production and the three basic economic questions are also outlined.
This chapter introduces economics and distinguishes between microeconomics and macroeconomics. Microeconomics seeks to understand what goods are produced, how they are produced, and who gets them. Macroeconomics focuses on determining the standard of living, cost of living, and reasons for economic fluctuations. The economic way of thinking emphasizes scarcity, choice, tradeoffs and opportunity costs. Economists make positive statements using observation, models, and theories to understand economic behavior.
1. This chapter introduces the basic principles of economics, including principles of individual choice, how choices interact, and economy-wide interactions. It establishes that economics analyzes choices must be made because resources are scarce.
2. Key concepts introduced are opportunity costs, marginal analysis for decision making, incentives, gains from trade through specialization, markets moving toward equilibrium, and situations where government intervention may be needed to improve efficiency.
3. The chapter lays out a framework of microeconomic and macroeconomic analysis based on these foundational principles.
This document provides an overview of microeconomics concepts including:
1. Economics is defined as the study of how scarce resources are allocated among alternative uses.
2. Key concepts in microeconomics include rational choice, incentives, marginal analysis, and opportunity cost.
3. Economic systems must answer questions about what to produce, how to produce it, and who receives it given the constraints of scarce resources.
This document provides an overview of macroeconomics concepts. It begins with defining economics and its origin from the Greek words oikos and nomus, meaning household management. It then discusses the central problem of scarcity due to limited resources and unlimited wants. Factors of production and the circular flow model showing the flow of resources and payments between households and businesses are introduced. Opportunity cost, basic economic questions around consumption, distribution and growth, and the types of economic systems are also summarized. Finally, it distinguishes between positive and normative economics and microeconomics versus macroeconomics.
1. Economics is the study of how people make choices to satisfy their wants given scarce resources and unlimited needs. Scarcity means limited resources to meet unlimited wants.
2. There are three factors of production - land, labor, and capital. Land includes natural resources, labor includes human effort, and capital includes human-made resources used to produce goods and services.
3. Opportunity cost refers to the best alternative given up when making a choice. It is measured in terms of the highest valued alternative forgone or not chosen. A production possibilities graph shows the maximum possible output combinations of two items an economy can produce with limited resources.
This document provides an overview of introductory economics concepts. It discusses that economics is the study of how humans make choices about scarce resources. It identifies the four factors of production as land, labor, capital, and entrepreneurship. It explains that economics helps answer the fundamental questions of what, how, and for whom to produce goods and services. It also defines key economic terms like scarcity, needs, wants, production and gross domestic product. The document aims to help readers understand basic economic concepts and reasoning.
Economics is the social science that studies how individuals, governments, firms, and nations make choices on allocating scarce resources to satisfy their unlimited wants. The document provides an overview of key concepts in economics including:
- Microeconomics examines individual agents and markets and how they interact, while macroeconomics analyzes issues affecting the entire economy such as growth, unemployment, and policies.
- Other distinctions include positive economics which describes what is, normative economics which advocates what ought to be, and differences between theories.
- Economic analysis can be applied throughout society in areas like business, education, crime, and the environment. The ultimate goal is improving living conditions.
The document outlines principles of economics
- Adam Smith is considered the father of modern economics and authored The Wealth of Nations in 1776, which argued that individuals pursuing self-interest can benefit society through free market competition.
- Economics is the social science concerned with how individuals and societies satisfy unlimited wants with limited resources and make decisions about production, distribution, and consumption.
- Microeconomics examines individual markets and behavior of firms and consumers, while macroeconomics examines a nation's total output, employment, prices, and income distribution.
The document outlines 10 principles of economics: 1) People face tradeoffs when making decisions; 2) The cost of something is what you give up to get it; 3) Rational people think at the margin by comparing marginal costs and benefits; 4) People respond to incentives. Trade can make everyone better off and markets are generally a good way to organize economic activity, though governments can improve outcomes during market failures. A country's productivity determines its standard of living. Inflation results from too much money printing by the government, and there is a short-run tradeoff between inflation and unemployment.
The document provides an overview of basic economic principles including scarcity, factors of production, and different economic systems. It discusses how individuals and societies make choices to deal with limited resources. Market economies answer the three basic economic questions through supply and demand interactions in product and factor markets, as depicted in the circular flow model. The US has a mixed economy that incorporates aspects of both market and command systems.
The document discusses the basic economic problem of scarcity and choice in resource allocation. It explains that resources are limited but human wants and needs are unlimited, so choices must constantly be made about what to produce, how to produce it, and who receives goods and services. These choices involve trade-offs, with selecting more of one thing necessarily meaning less of something else. The concept of opportunity cost, which measures the forgone benefits of the next best alternative choice, is also introduced.
The document discusses several key economic principles:
1) Economics seeks to analyze production, distribution, and consumption of goods and services given the scarcity of resources. Microeconomics examines individual units while macroeconomics examines aggregates.
2) The production possibilities curve illustrates scarcity and opportunity costs graphically, showing the tradeoffs between two goods an economy can produce.
3) Absolute advantage refers to being able to produce more of a good using the same inputs. Comparative advantage means having a lower opportunity cost of production. Countries can gain from trade based on comparative advantage.
The document outlines 10 fundamental principles of economics divided into 3 categories: how people make decisions, how people interact, and how the economy as a whole works. It describes each principle in 1-2 paragraphs. The principles of how people make decisions are that people face tradeoffs, opportunity costs are what is given up, people think at the margin, and respond to incentives. The principles of how people interact are that trade can make all parties better off, markets are generally efficient but government can improve outcomes. The principles of how the economy works are that standard of living depends on productivity, inflation occurs when money supply grows too quickly, and there is a short-run tradeoff between inflation and unemployment.
The document discusses different types of economic systems and how they answer the three basic economic questions of what to produce, how to produce it, and who gets what is produced. It explains that modern economies are mostly mixed, combining market forces with some government intervention. A free market uses supply and demand to determine production and distribution, while a centrally planned economy has the government control and direct all economic decisions. Most countries today utilize a mixed system with market allocation and private enterprise alongside policies to promote public goods and correct market failures.
This document discusses how economists think and work. It explains that economists use the scientific method to develop theories and models to understand the economy. Economists create simplified models like the circular flow diagram and production possibilities frontier to illustrate key economic concepts. The document also discusses how economists take on two roles: as scientists seeking to explain how the economy works, and as policy advisors making recommendations to improve the economy. However, economists do not always agree due to differences in their scientific analysis or underlying values.
The document discusses key economic concepts related to scarcity and decision-making. It explains that resources are scarce because human wants are unlimited but resources are finite, so people must make choices. It defines opportunity cost as the next best alternative forgone in making a decision. It also discusses thinking at the margin, where people weigh the extra costs and benefits of options, and externalities, where the impact of choices affects others. The overall document provides an introduction to basic economic concepts through the lens of scarcity.
Here are some potential questions I could ask and information I could gather by interviewing my parents about our family's budget:
1. How many people are in our family?
2. How many income earners contribute to our household budget?
3. Approximately how much does our family earn each month from jobs, businesses, investments, etc.?
4. How do you allocate our monthly income across major spending categories like housing, food, utilities, transportation, education, savings, etc.?
5. What do you do if expenses end up being higher than planned one month and we run short on our budget? Do you cut back on some purchases, use savings, or find other ways to make up the difference?
This document discusses key concepts in economics including:
1) It defines economics as the study of how society allocates scarce resources among competing demands. It also discusses microeconomics and macroeconomics.
2) It outlines the basic economic problem of unlimited wants and scarce resources, and how this leads to resource allocation and choice.
3) It explains key economic terms like efficiency, opportunity cost, comparative advantage, demand and supply, and different market structures including monopoly, perfect competition, oligopoly, and monopolistic competition.
This document provides an introduction to economics. It defines economics as the study of how individuals and societies choose to use scarce resources. It discusses the key economic questions of what, how, and who and introduces some core economic concepts. These include positive versus normative analysis, incentives, marginal analysis, and economic models. The document also previews how microeconomics and macroeconomics are used to understand markets, business decisions, policies, growth and fluctuations. Examples are provided around traffic congestion and hybrid vehicles to illustrate economic concepts.
The document defines key economic concepts including scarcity, opportunity cost, specialization, markets, supply and demand, monetary policy, fiscal policy, and economic growth. Resources are limited so people must make choices, and choosing one alternative means forgoing the next best option or opportunity cost. Specialization and trade allow people and countries to focus on specific production and gain from interdependence. Markets facilitate exchange through the interaction of supply and demand which determine prices. Governments influence the economy through monetary policy, fiscal policy, and other economic policies and institutions with goals of stability, employment, and growth.
This document provides an overview of key economic concepts including:
- Economics is the study of how societies allocate scarce resources to satisfy unlimited wants. It can be divided into microeconomics and macroeconomics.
- The economic problem involves determining what, how, and for whom to produce goods and services.
- Opportunity cost, tradeoffs, and rational decision making are important concepts in economics for understanding how individuals and societies make choices.
This document defines economics and distinguishes between microeconomics and macroeconomics. It explains that economics studies how individuals, businesses, governments and societies cope with scarcity. It also discusses the two main economic questions of what, how, and for whom goods and services are produced. Additionally, it covers key ideas in economics like incentives, tradeoffs, and opportunity cost.
This document provides an overview of introductory economics concepts. It defines economics as the study of how people try to satisfy unlimited wants through scarce resources. It discusses the three basic economic questions of what, how, and for whom to produce. The four factors of production are outlined as land, labor, capital, and entrepreneurship. The document also defines needs versus wants, and explains why economics is considered a social science.
1. This chapter introduces the basic principles of economics, including principles of individual choice, how choices interact, and economy-wide interactions. It establishes that economics analyzes choices must be made because resources are scarce.
2. Key concepts introduced are opportunity costs, marginal analysis for decision making, incentives, gains from trade through specialization, markets moving toward equilibrium, and situations where government intervention may be needed to improve efficiency.
3. The chapter lays out a framework of microeconomic and macroeconomic analysis based on these foundational principles.
This document provides an overview of microeconomics concepts including:
1. Economics is defined as the study of how scarce resources are allocated among alternative uses.
2. Key concepts in microeconomics include rational choice, incentives, marginal analysis, and opportunity cost.
3. Economic systems must answer questions about what to produce, how to produce it, and who receives it given the constraints of scarce resources.
This document provides an overview of macroeconomics concepts. It begins with defining economics and its origin from the Greek words oikos and nomus, meaning household management. It then discusses the central problem of scarcity due to limited resources and unlimited wants. Factors of production and the circular flow model showing the flow of resources and payments between households and businesses are introduced. Opportunity cost, basic economic questions around consumption, distribution and growth, and the types of economic systems are also summarized. Finally, it distinguishes between positive and normative economics and microeconomics versus macroeconomics.
1. Economics is the study of how people make choices to satisfy their wants given scarce resources and unlimited needs. Scarcity means limited resources to meet unlimited wants.
2. There are three factors of production - land, labor, and capital. Land includes natural resources, labor includes human effort, and capital includes human-made resources used to produce goods and services.
3. Opportunity cost refers to the best alternative given up when making a choice. It is measured in terms of the highest valued alternative forgone or not chosen. A production possibilities graph shows the maximum possible output combinations of two items an economy can produce with limited resources.
This document provides an overview of introductory economics concepts. It discusses that economics is the study of how humans make choices about scarce resources. It identifies the four factors of production as land, labor, capital, and entrepreneurship. It explains that economics helps answer the fundamental questions of what, how, and for whom to produce goods and services. It also defines key economic terms like scarcity, needs, wants, production and gross domestic product. The document aims to help readers understand basic economic concepts and reasoning.
Economics is the social science that studies how individuals, governments, firms, and nations make choices on allocating scarce resources to satisfy their unlimited wants. The document provides an overview of key concepts in economics including:
- Microeconomics examines individual agents and markets and how they interact, while macroeconomics analyzes issues affecting the entire economy such as growth, unemployment, and policies.
- Other distinctions include positive economics which describes what is, normative economics which advocates what ought to be, and differences between theories.
- Economic analysis can be applied throughout society in areas like business, education, crime, and the environment. The ultimate goal is improving living conditions.
The document outlines principles of economics
- Adam Smith is considered the father of modern economics and authored The Wealth of Nations in 1776, which argued that individuals pursuing self-interest can benefit society through free market competition.
- Economics is the social science concerned with how individuals and societies satisfy unlimited wants with limited resources and make decisions about production, distribution, and consumption.
- Microeconomics examines individual markets and behavior of firms and consumers, while macroeconomics examines a nation's total output, employment, prices, and income distribution.
The document outlines 10 principles of economics: 1) People face tradeoffs when making decisions; 2) The cost of something is what you give up to get it; 3) Rational people think at the margin by comparing marginal costs and benefits; 4) People respond to incentives. Trade can make everyone better off and markets are generally a good way to organize economic activity, though governments can improve outcomes during market failures. A country's productivity determines its standard of living. Inflation results from too much money printing by the government, and there is a short-run tradeoff between inflation and unemployment.
The document provides an overview of basic economic principles including scarcity, factors of production, and different economic systems. It discusses how individuals and societies make choices to deal with limited resources. Market economies answer the three basic economic questions through supply and demand interactions in product and factor markets, as depicted in the circular flow model. The US has a mixed economy that incorporates aspects of both market and command systems.
The document discusses the basic economic problem of scarcity and choice in resource allocation. It explains that resources are limited but human wants and needs are unlimited, so choices must constantly be made about what to produce, how to produce it, and who receives goods and services. These choices involve trade-offs, with selecting more of one thing necessarily meaning less of something else. The concept of opportunity cost, which measures the forgone benefits of the next best alternative choice, is also introduced.
The document discusses several key economic principles:
1) Economics seeks to analyze production, distribution, and consumption of goods and services given the scarcity of resources. Microeconomics examines individual units while macroeconomics examines aggregates.
2) The production possibilities curve illustrates scarcity and opportunity costs graphically, showing the tradeoffs between two goods an economy can produce.
3) Absolute advantage refers to being able to produce more of a good using the same inputs. Comparative advantage means having a lower opportunity cost of production. Countries can gain from trade based on comparative advantage.
The document outlines 10 fundamental principles of economics divided into 3 categories: how people make decisions, how people interact, and how the economy as a whole works. It describes each principle in 1-2 paragraphs. The principles of how people make decisions are that people face tradeoffs, opportunity costs are what is given up, people think at the margin, and respond to incentives. The principles of how people interact are that trade can make all parties better off, markets are generally efficient but government can improve outcomes. The principles of how the economy works are that standard of living depends on productivity, inflation occurs when money supply grows too quickly, and there is a short-run tradeoff between inflation and unemployment.
The document discusses different types of economic systems and how they answer the three basic economic questions of what to produce, how to produce it, and who gets what is produced. It explains that modern economies are mostly mixed, combining market forces with some government intervention. A free market uses supply and demand to determine production and distribution, while a centrally planned economy has the government control and direct all economic decisions. Most countries today utilize a mixed system with market allocation and private enterprise alongside policies to promote public goods and correct market failures.
This document discusses how economists think and work. It explains that economists use the scientific method to develop theories and models to understand the economy. Economists create simplified models like the circular flow diagram and production possibilities frontier to illustrate key economic concepts. The document also discusses how economists take on two roles: as scientists seeking to explain how the economy works, and as policy advisors making recommendations to improve the economy. However, economists do not always agree due to differences in their scientific analysis or underlying values.
The document discusses key economic concepts related to scarcity and decision-making. It explains that resources are scarce because human wants are unlimited but resources are finite, so people must make choices. It defines opportunity cost as the next best alternative forgone in making a decision. It also discusses thinking at the margin, where people weigh the extra costs and benefits of options, and externalities, where the impact of choices affects others. The overall document provides an introduction to basic economic concepts through the lens of scarcity.
Here are some potential questions I could ask and information I could gather by interviewing my parents about our family's budget:
1. How many people are in our family?
2. How many income earners contribute to our household budget?
3. Approximately how much does our family earn each month from jobs, businesses, investments, etc.?
4. How do you allocate our monthly income across major spending categories like housing, food, utilities, transportation, education, savings, etc.?
5. What do you do if expenses end up being higher than planned one month and we run short on our budget? Do you cut back on some purchases, use savings, or find other ways to make up the difference?
This document discusses key concepts in economics including:
1) It defines economics as the study of how society allocates scarce resources among competing demands. It also discusses microeconomics and macroeconomics.
2) It outlines the basic economic problem of unlimited wants and scarce resources, and how this leads to resource allocation and choice.
3) It explains key economic terms like efficiency, opportunity cost, comparative advantage, demand and supply, and different market structures including monopoly, perfect competition, oligopoly, and monopolistic competition.
This document provides an introduction to economics. It defines economics as the study of how individuals and societies choose to use scarce resources. It discusses the key economic questions of what, how, and who and introduces some core economic concepts. These include positive versus normative analysis, incentives, marginal analysis, and economic models. The document also previews how microeconomics and macroeconomics are used to understand markets, business decisions, policies, growth and fluctuations. Examples are provided around traffic congestion and hybrid vehicles to illustrate economic concepts.
The document defines key economic concepts including scarcity, opportunity cost, specialization, markets, supply and demand, monetary policy, fiscal policy, and economic growth. Resources are limited so people must make choices, and choosing one alternative means forgoing the next best option or opportunity cost. Specialization and trade allow people and countries to focus on specific production and gain from interdependence. Markets facilitate exchange through the interaction of supply and demand which determine prices. Governments influence the economy through monetary policy, fiscal policy, and other economic policies and institutions with goals of stability, employment, and growth.
This document provides an overview of key economic concepts including:
- Economics is the study of how societies allocate scarce resources to satisfy unlimited wants. It can be divided into microeconomics and macroeconomics.
- The economic problem involves determining what, how, and for whom to produce goods and services.
- Opportunity cost, tradeoffs, and rational decision making are important concepts in economics for understanding how individuals and societies make choices.
This document defines economics and distinguishes between microeconomics and macroeconomics. It explains that economics studies how individuals, businesses, governments and societies cope with scarcity. It also discusses the two main economic questions of what, how, and for whom goods and services are produced. Additionally, it covers key ideas in economics like incentives, tradeoffs, and opportunity cost.
This document provides an overview of introductory economics concepts. It defines economics as the study of how people try to satisfy unlimited wants through scarce resources. It discusses the three basic economic questions of what, how, and for whom to produce. The four factors of production are outlined as land, labor, capital, and entrepreneurship. The document also defines needs versus wants, and explains why economics is considered a social science.
Economics studies how individuals, businesses, governments and societies make choices when faced with scarcity and limited resources. It examines what, how and for whom goods and services are produced. Microeconomics focuses on individual and business choices and interactions in markets, while macroeconomics looks at whole economies. Choices determine patterns of production and use of factors like land, labor, capital and entrepreneurship. Pursuing self-interest through choices can promote social interests if it leads to efficient use of resources and fair distribution of goods.
This document provides an overview of economics. It defines economics as the study of how individuals, businesses, governments, and societies make choices with scarce resources. It distinguishes between microeconomics, which studies individual and business decision-making, and macroeconomics, which studies overall economic activity and performance. Two key economic questions are examined: what goods and services are produced, how they are produced, and who receives them. The concept of incentives, tradeoffs, and opportunity costs are introduced as part of the "economic way of thinking."
This document provides an overview of key economic concepts through three sections. Section 1 defines economics as dealing with scarcity, where limited resources require people and societies to make choices. The factors of production - land, labor, and capital - are introduced. Section 2 discusses opportunity costs and how individuals and groups must consider trade-offs. A production possibilities curve is introduced to show the alternatives available to a nation based on its resources and is the topic of Section 3, which also addresses efficiency, growth, and technology.
This chapter introduces economics and key concepts like scarcity, trade-offs, and opportunity costs. It discusses how economists use models to study the real world. The main points are:
1) Economics involves making choices because resources are scarce and wants exceed what's available. The four factors of production are land, labor, capital, and entrepreneurship.
2) Trade-offs require sacrificing one thing for another and create opportunity costs, like the value of the next best alternative given up. Production possibilities curves illustrate the maximum amounts of two items an economy can produce.
3) Economists use models as simplified representations to explain behavior. Microeconomics examines individuals and firms while macroeconomics looks at whole economies
This document provides an introduction to economics, distinguishing between microeconomics and macroeconomics. It defines economics as the study of how society uses scarce resources to produce goods and services. Microeconomics examines individual choices of households, businesses, and markets, while macroeconomics looks at overall national and global economic performance. The document also discusses the fundamental economic questions of what, how, and for whom to produce goods and services. It introduces the concept of opportunity cost and uses the production possibilities curve to illustrate scarcity, choice, and trade-offs.
APPLIED ECONOMICS 11_ INTRODUCTION TO ECONOMICS.pptxMelAnnDeLeonII1
There is no single most important factor of production. All four factors - land, labor, capital and entrepreneurship - are important resources that work together in a complementary way to produce goods and services in an economy.
It is a presentation of about Economics and its principles.This ppt will teach you economics from basic level to advanced level. Studying economics helps us to compare our country economy to different countries in the world.
This document discusses key concepts in economics including:
1. Economics analyzes the production, distribution, and consumption of goods and services. Microeconomics focuses on individual agents like consumers and firms, while macroeconomics looks at whole economies.
2. Scarcity means human wants exceed limited resources, so not all goals can be achieved. Opportunity cost is the next best alternative given up when making a choice.
3. The basic economic problems are what to produce, how to produce it, and who gets it. Market and planned economies answer these differently based on private vs public decision making.
This document provides an overview of key economic concepts related to scarcity and decision-making. It discusses that economics is the study of how people satisfy unlimited wants with limited resources. Scarcity means resources are limited and this creates opportunity costs when making choices. The circular flow model shows how households and businesses interact in markets for goods, services, and factors of production. Economics helps individuals and societies make rational decisions by understanding costs, benefits, and trade-offs.
The document provides an overview of basic economic principles including what economics is, the fundamental economic problem of scarcity, and the three basic economic questions of what, how, and for whom to produce goods and services. It defines the four factors of production as land, labor, capital, and entrepreneurship. It also discusses concepts like productivity, production, economic decision making including tradeoffs and opportunity costs, and different economic systems including market economies.
This document provides an introduction to managerial economics and economic concepts. It defines economics as the study of how societies allocate scarce resources. Managerial economics applies economic theory to help organizations achieve goals efficiently. The document discusses key economic topics like scarcity, opportunity cost, production possibilities frontiers, efficiency, and economic growth. It also distinguishes microeconomics, which examines individual and business decisions, from macroeconomics, which analyzes performance of national and global economies.
This document provides an overview of economics, defining it as the study of how individuals, businesses, governments, and societies cope with scarcity. It distinguishes between microeconomics and macroeconomics. The two big questions of economics are what, how, and for whom goods and services are produced, and when self-interest promotes the social interest. Key economic concepts covered include incentives, opportunity cost, trade-offs at the margin, and how institutions shape incentives. The document also discusses how economists work as social scientists through observation, model-building, and testing models against facts.
This document provides an overview of economics, defining it as the study of how individuals, businesses, governments, and societies cope with scarcity. It distinguishes between microeconomics and macroeconomics. The two big questions of economics are what, how, and for whom goods and services are produced, and when self-interest promotes the social interest. Key economic concepts covered include incentives, opportunity cost, trade-offs at the margin, and how institutions shape incentives. The document also discusses how economists observe behavior, build models, test models, and address obstacles in their work.
This document provides an overview of economics, defining it as the study of how individuals, businesses, governments, and societies cope with scarcity. It distinguishes between microeconomics and macroeconomics. The two big questions of economics are what, how, and for whom goods and services are produced, and when self-interest promotes the social interest. Key economic concepts covered include incentives, opportunity cost, trade-offs at the margin, and how institutions shape incentives. The document also discusses how economists observe behavior, build models, test models, and navigate obstacles in their work.
The document provides an overview of key economic concepts including:
1) Economics is the study of how society manages its scarce resources based on needs and wants. People face tradeoffs when making decisions.
2) Rational individuals make decisions by weighing marginal costs against marginal benefits. They respond to incentives in their choices.
3) Markets are generally efficient at allocating resources, though governments sometimes intervene to address market failures or inequities. Productivity determines living standards while inflation stems from too much money growth. Societies experience short-run tradeoffs between inflation and unemployment.
The document provides an overview of basic economic principles including:
1. Economics is the study of how people make choices with scarce resources. Societies must answer what, how, and for whom goods and services are produced.
2. The four factors of production are land, labor, capital, and entrepreneurship. Entrepreneurs take risks by combining factors of production to create new products and drive competition.
3. The US economy is a mixed economy that incorporates both private markets and government intervention to achieve goals like economic equity and security.
Introduction to entrepreneurship africa perspectiveShaheen Khan
Entrepreneurship involves creating and building something of value from limited resources, pursuing opportunities regardless of current resources. It benefits individuals, groups, organizations and society through the provision of goods and services. Entrepreneurs are skilled at identifying new products, production methods, or marketing ways and setting up operations to exploit these opportunities. They create enterprises where none existed before by combining ideas, skills, money, equipment and markets. Entrepreneurship is important as it sparks economic activity and growth through new businesses and jobs.
Business managent Importance of Leadership Shaheen Khan
This document provides an overview of leadership theories and approaches. It distinguishes between managers and leaders, defining leadership as influencing others to pursue organizational goals willingly. It describes the nature of leadership as directing behavior towards accomplishing plans and objectives. Several leadership theories are summarized, including trait theories, behavioral approaches, and situational leadership models. Key leadership traits identified include emotional stability, dominance, enthusiasm, and social boldness. Behavioral styles examined include task-oriented versus employee-oriented leadership.
This document provides an overview of key concepts from Chapter 2 of an information systems course. It discusses the components of an information system including people, tasks, information, organization, and information technology. It describes how transaction processing systems support business processes through input, processing, storage, and output of transaction data. It also explains how computer-aided design, computer-aided manufacturing, and computer-integrated manufacturing automate product design and manufacturing processes.
Managers have responsibilities to plan, organize, direct and control business processes. They make three types of decisions: structured, semi-structured, and unstructured. Information technology supports managerial decision making through management information systems, decision support systems, and group decision support systems. These systems provide managers with internal and external data, models, and tools to make quantitative judgments and identify optimal solutions.
This document discusses key concepts related to data, information, knowledge, and decision making. It defines data as raw facts or observations, information as processed data that provides meaningful context, and knowledge as the combined result of experiences and information possessed. The document also describes attributes of information quality, types of managerial decisions as structured, unstructured, or semi-structured, and levels of decision making as strategic, tactical, or operational. Overall, the document provides an overview of fundamental concepts for understanding information use in decision making.
The document provides an overview of the evolution of computers from the earliest information processing machines to modern personal computers and networks. It discusses:
1) How early computers took input and produced output but relied on software to direct hardware operations.
2) How computer hardware evolved rapidly through generations using different technologies like vacuum tubes, transistors, integrated circuits and microprocessors making computers smaller, faster and cheaper.
3) How the microprocessor revolutionized computing by enabling the development of microcomputers and personal computers.
4) How networks emerged allowing multiple users to access mainframe computers and later connect personal computers, leading to the Internet revolution.
The document discusses the systems development life cycle (SDLC), which includes investigation, analysis, design, development, implementation, maintenance, and retirement phases. It describes key activities in each phase, such as defining problems, producing feasibility studies, gathering requirements, designing user interfaces and databases, testing systems, implementing new systems, maintaining systems over their lifetimes, and eventually retiring systems. The overall goal of the SDLC is to investigate problems, design system solutions, develop and test systems, implement them, and maintain them until they need to be replaced.
E-commerce involves conducting business transactions electronically using telecommunications networks. It includes both business-to-business and business-to-consumer transactions conducted over the internet. As internet-based e-commerce grows, companies are able to dramatically expand their markets globally and potentially eliminate physical shops in favor of online sales. E-commerce occurs through several models including business-to-business, business-to-consumer, and consumer-to-consumer transactions.
The document provides an overview of the Internet and how it functions. It can be summarized as follows:
The Internet is a global network of networks that connects millions of computers around the world. It was originally developed by researchers but is now used widely for various purposes like email, web publishing, messaging, banking and more. Key protocols like TCP/IP allow for the transmission of data between different networks and systems. Users can access the Internet through direct connections, dial-up, or broadband. Popular applications include email, instant messaging, file transfers, remote access and more. The client-server model supports distributed applications across the network.
This chapter discusses database basics, anatomy, operations, and applications. It defines a database as a set of logically related files organized to minimize data redundancy and facilitate access by applications. Key points include:
- Databases store large amounts of information easily and allow flexible retrieval and organization of data.
- A database contains files which contain records made of fields. Fields have defined data types like text or numeric.
- Common database operations are browsing, querying, sorting, and generating reports, labels, and letters.
- Specialized database programs exist for contact managers, calendars, maps, and notes. Real-time databases now replace batch processing for immediate user interaction.
This document discusses various management concepts and how information technology can support management functions. It covers the roles and levels of management, types of management decisions, and dimensions of management information. It also discusses how IT can enable managerial communications, collaborative work, distributed computing, and the automated office. Further, it explores how IT supports managerial decision making through management information systems, decision support systems, group decision support systems, and expert systems. Finally, it discusses how IT can support business strategy and improve efficiency and effectiveness through the value chain.
1) The document introduces information systems and their basic components of input, processing, output, feedback, and control. It defines a system and provides examples.
2) People play important roles in information systems as users, designers, and managers. Tasks in organizations are also discussed in relation to communication, decision-making, operations, and strategic management.
3) Transaction processing systems are described as the basic accounting systems that track daily business transactions through entering, processing, storing, reporting, and allowing user inquiry of data. Enterprise resource planning integrates transaction systems across functions.
This document provides an overview of different types of software, including compilers, applications, and system software. It discusses how computer programs work by turning algorithms into machine-readable code. It also describes the evolution of programming languages and how translators allow languages to more closely resemble human languages. Finally, it covers various operating systems, utilities, and user interfaces that connect humans and computers, including DOS, Windows, MacOS, Linux, and the advantages of graphical user interfaces.
This document provides an overview of computer networking and telecommunications. It discusses how networks allow hardware, software, and people to be connected. It describes the basic anatomy of networks, including network interface cards and modems. It also discusses different types of networks like local area networks and wide area networks. Additional topics covered include electronic mail, bulletin boards, teleconferencing, and emerging technologies like video conferencing and electronic funds transfer.
The document provides an overview of computer evolution and hardware components. It can be summarized as follows:
1) Computer hardware evolved rapidly from early vacuum tube computers to transistor-based systems to today's microprocessor-powered devices. Moore's Law predicted that processing power would double every 18 months.
2) The microprocessor revolutionized computing, allowing the development of personal computers that were as powerful as room-sized mainframes.
3) Modern computer systems consist of an input devices, a central processing unit (CPU), memory, storage devices, and output devices connected via buses. The CPU processes data and memory temporarily stores programs and data.
4) Common storage devices include magnetic disks, optical disks, solid
This document discusses key concepts related to data, information, knowledge, and decision making. It defines data as raw facts, information as processed data that provides meaningful context, and knowledge as the combined result of experiences and information. The document also describes different types of decisions, levels of decision making, attributes of information quality, and sources of formal and informal information.
How to Manage Your Lost Opportunities in Odoo 17 CRMCeline George
Odoo 17 CRM allows us to track why we lose sales opportunities with "Lost Reasons." This helps analyze our sales process and identify areas for improvement. Here's how to configure lost reasons in Odoo 17 CRM
ISO/IEC 27001, ISO/IEC 42001, and GDPR: Best Practices for Implementation and...PECB
Denis is a dynamic and results-driven Chief Information Officer (CIO) with a distinguished career spanning information systems analysis and technical project management. With a proven track record of spearheading the design and delivery of cutting-edge Information Management solutions, he has consistently elevated business operations, streamlined reporting functions, and maximized process efficiency.
Certified as an ISO/IEC 27001: Information Security Management Systems (ISMS) Lead Implementer, Data Protection Officer, and Cyber Risks Analyst, Denis brings a heightened focus on data security, privacy, and cyber resilience to every endeavor.
His expertise extends across a diverse spectrum of reporting, database, and web development applications, underpinned by an exceptional grasp of data storage and virtualization technologies. His proficiency in application testing, database administration, and data cleansing ensures seamless execution of complex projects.
What sets Denis apart is his comprehensive understanding of Business and Systems Analysis technologies, honed through involvement in all phases of the Software Development Lifecycle (SDLC). From meticulous requirements gathering to precise analysis, innovative design, rigorous development, thorough testing, and successful implementation, he has consistently delivered exceptional results.
Throughout his career, he has taken on multifaceted roles, from leading technical project management teams to owning solutions that drive operational excellence. His conscientious and proactive approach is unwavering, whether he is working independently or collaboratively within a team. His ability to connect with colleagues on a personal level underscores his commitment to fostering a harmonious and productive workplace environment.
Date: May 29, 2024
Tags: Information Security, ISO/IEC 27001, ISO/IEC 42001, Artificial Intelligence, GDPR
-------------------------------------------------------------------------------
Find out more about ISO training and certification services
Training: ISO/IEC 27001 Information Security Management System - EN | PECB
ISO/IEC 42001 Artificial Intelligence Management System - EN | PECB
General Data Protection Regulation (GDPR) - Training Courses - EN | PECB
Webinars: https://pecb.com/webinars
Article: https://pecb.com/article
-------------------------------------------------------------------------------
For more information about PECB:
Website: https://pecb.com/
LinkedIn: https://www.linkedin.com/company/pecb/
Facebook: https://www.facebook.com/PECBInternational/
Slideshare: http://www.slideshare.net/PECBCERTIFICATION
हिंदी वर्णमाला पीपीटी, hindi alphabet PPT presentation, hindi varnamala PPT, Hindi Varnamala pdf, हिंदी स्वर, हिंदी व्यंजन, sikhiye hindi varnmala, dr. mulla adam ali, hindi language and literature, hindi alphabet with drawing, hindi alphabet pdf, hindi varnamala for childrens, hindi language, hindi varnamala practice for kids, https://www.drmullaadamali.com
The simplified electron and muon model, Oscillating Spacetime: The Foundation...RitikBhardwaj56
Discover the Simplified Electron and Muon Model: A New Wave-Based Approach to Understanding Particles delves into a groundbreaking theory that presents electrons and muons as rotating soliton waves within oscillating spacetime. Geared towards students, researchers, and science buffs, this book breaks down complex ideas into simple explanations. It covers topics such as electron waves, temporal dynamics, and the implications of this model on particle physics. With clear illustrations and easy-to-follow explanations, readers will gain a new outlook on the universe's fundamental nature.
Introduction to AI for Nonprofits with Tapp NetworkTechSoup
Dive into the world of AI! Experts Jon Hill and Tareq Monaur will guide you through AI's role in enhancing nonprofit websites and basic marketing strategies, making it easy to understand and apply.
This presentation includes basic of PCOS their pathology and treatment and also Ayurveda correlation of PCOS and Ayurvedic line of treatment mentioned in classics.
This presentation was provided by Steph Pollock of The American Psychological Association’s Journals Program, and Damita Snow, of The American Society of Civil Engineers (ASCE), for the initial session of NISO's 2024 Training Series "DEIA in the Scholarly Landscape." Session One: 'Setting Expectations: a DEIA Primer,' was held June 6, 2024.
it describes the bony anatomy including the femoral head , acetabulum, labrum . also discusses the capsule , ligaments . muscle that act on the hip joint and the range of motion are outlined. factors affecting hip joint stability and weight transmission through the joint are summarized.
How to Add Chatter in the odoo 17 ERP ModuleCeline George
In Odoo, the chatter is like a chat tool that helps you work together on records. You can leave notes and track things, making it easier to talk with your team and partners. Inside chatter, all communication history, activity, and changes will be displayed.
2. INTRODUCTION
Economic questions arise due to the
principle that resources are scarce ie: not
sufficient.
People have unlimited needs and wants that
they try to satisfy with these limited
resources. Economics focuses on how these
needs and wants are satisfied with the most
efficient outcome possible.
3. • Economics is regarded as a social science
because it tries to predict human behavior
and measure the impact of human behavior
on the economy by using economic models.
• Economics can be classified into two main
categories: Micro economics which focuses
on the study of choices made by individuals
and firms. And the those choices impact on
the markets and influence government
decisions.
• Macro economics is the study of the national
and global economy and how they are
influenced by individuals, firms and
government.
4. There are two questions that summarize
economics-
1)what, how, when, where and for
whom goods and services get
produced?
2)When do choices made in the pursuit of
self-interest also promote the social
interest?
5. • What, How, When, Where and For Whom?
• Goods and services are the objects that people
value and produce to satisfy wants.
• What?
• What we produce changes over time as changes in
technology allow us to produce more.
• Today, most people in the rich industrial countries
produce services.
• How?
• Goods and services are produced by using productive
resources that economists call factors of production,
which are grouped as:
• Land
• Labor
• Capital
• Entrepreneurship
6. When?
Sometimes production slackens off in a
recession and other times it expands
rapidly in a business cycle.
What makes production rise and fall? Can
government action prevent recession?
Economics helps us to answer questions
about when things are produced.
Where?
Volkswagen produces cars in several
countries and sells them throughout the
world.
7. • Financial services are concentrated in Frankfurt and
London, while telecommunications industries
concentrate in Finland.
• Economics helps us to answer questions about where
things are produced.
• For Whom?
• Who gets the goods and services depends on the
incomes that people earn.
• Land earns rent.
• Labor earns wages.
• Capital earns interest.
• Entrepreneurship earns profit.
• Land, labour, capital and entrepreneurship are known
as the factors of production and different people own
them.
8. • When is the Pursuit of Self-Interest in
Society’s Interest?
• Every day, millions of South Africans and 6.1
billion other people make economic choices
that result in ―What‖, ―How‖, ―When‖,
―Where‖ and ―For Whom‖ goods and
services get produced.
• You make choices that are in your self-
interest—choices that you think are best
for you.
• Choices that are best for society as a whole
are said to be in the social interest.
• Is it possible that when each one of us makes
choices that are in our self-interest, it also
turns out that these choices are also in the
social interest?
9. • A few issues in today’s world illustrate the
importance of this question:
• Do the technological advances in the ―new
economy‖ bring benefits to all?
• Corporate scandals show that big business
works against the social interest?
• Who will bear the cost of global warming?
• The argument of responsibility for global
warming is very complex as it is generally
thought that the main contributors to pollution
are 1st world countries and this aided their
economic growth, should 3rd world countries
slow down their growth and bear the higher
cost of being environmentally sensitive while
achieving economic growth at a higher cost?
10. • 1.1 The Fundamental Economic Challenge
• Choices and Trade-offs
• The economic way of thinking places scarcity and its
implication, choice, at centre stage. Because we face scarcity,
we must make choices. And when we make a choice we
select from the available alternatives. You can think about
every choice as a trade-off—giving up one thing to get
something else. ―Books versus butter‖ is a simple trade-off.
―Books‖ and ―butter‖ can stand for any two goods.
Whatever choice you make, you could have chosen
something else instead.
• In making choices, we have to make decisions about the best
possible choices in terms of allocating resources efficiently
and effectively. This includes incurring opportunity costs. Thus
for every decision we take, we incur opportunity costs.
• The highest-valued alternative that we give up to get
something is the opportunity cost of the activity chosen.
11. The concept of opportunity costs
Refers to the best option forgone. It is simply, giving up something to
gain something else. For example, as a business manager you are
constantly faced with the problem of choosing among alternative
methods of production, pricing of products, and maximizing profits
and minimizing losses. Other decisions may relate to aspects of
budgeting, human resources, and a range of other firm activities.
Understanding economics and employing economic tools can help
you solve many business problems.
Thinking about a choice as a trade-off emphasizes cost as an
opportunity forgone.
12. Choosing at the Margin
People make choices at the margin, which means that they
evaluate the consequences of making incremental changes in
the use of their resources.
The benefit from pursuing an incremental increase in an activity is its
marginal benefit.
The opportunity cost of pursuing an incremental increase in an
activity is its marginal cost.
By evaluating marginal benefits and marginal costs and choosing
only those actions that bring greater benefit than cost, we use our
scarce resource in the way that makes us as well off as possible.
Human Nature, Incentives and Institutions
Economists take human nature as given and view people as acting
in their self-interest.
Self-interested
13. Human Nature, Incentives and Institutions
Economists take human nature as given and view people as acting
in their self-interest.
Self-interested actions are not necessarily selfish actions. 8 Regent
Business School But if human nature is given and people pursue
self-interest, how can the social interest be served?
Ceteris Paribus
This is a Latin term that means ―other things being equal‖ or ―if
all other relevant things remain the same‖ (Parkin et al 2005:15).
Economic models enable us to determine the influence of one factor
at a time in the ‗imaginary world‘ of the model.
14. PRODUCTION POSSIBILITIES FRONTIER
The quantities of goods and services that we can produce are limited by both
our available resources and by technology. If we want to increase our production
of one good, we must decrease our production of something else – we face
trade-offs.
The production possibilities frontier (PPF) is the boundary between those
combinations of goods and services that can be produced and those that
cannot, that is, it is the limit to what we can produce (Parkin, Powell, and
Mathews 2005:32).
To illustrate the PPF, we focus on two goods and hold the quantities of all other
goods constant.
That is, we look at a model economy in which everything remains the same
(ceteris paribus) except the two goods we‘re considering. Figure 1.1 shows the
PPF for CDs and pizza, which stand for any pair of goods and services.
Points on the frontier, such as points A, B, C, D, E and F and points inside the
frontier, such as Z, are attainable. Points outside the frontier are unattainable.
15. PPF-
FIG1.1
The PPF makes the concept of opportunity cost precise.
If we move along the PPF from C to D, the opportunity cost of the increase in
pizza is the decrease in CDs. Note that the opportunity cost of a CD is the
inverse of the opportunity cost of a pizza.
One pizza costs 3 CDs.
One CD costs 1/3 of a pizza. All the points along the PPF are efficient. To
determine which of the alternative efficient quantities to produce, we compare
costs and benefits.
16. The PPF and Marginal Cost
The PPF determines opportunity cost.
The marginal cost of a good or service is the opportunity cost of producing
one more unit of it.
Figure 1.2 illustrates the marginal cost of pizza.
As we move along the PPF in part (a), the opportunity cost and the marginal cost
of pizza increases. Fig1.2 below
17. In figure 1.3 the blocks illustrate the increasing opportunity cost of pizza. Fig 1.3
below
18. The black dots and the line labeled MC shows the marginal cost of pizza.
Preferences and Marginal Benefit
Preferences are a description of a person‘s likes and dislikes. Economists
use marginal benefit and the marginal benefit curve to describe them.
The marginal benefit of a good is the benefit received from consuming one
more unit of it.
We measure marginal benefit by the amount that a person is willing to pay for an
additional unit of a good or service. It is a general principle that the more we
have of any good or service, the smaller is its marginal benefit and the less we
are willing to pay for an additional unit of it.
We call this general principle the principle of decreasing marginal benefit.
19. Figure 1.4 illustrates the marginal benefit curve which shows the
relationship between the marginal benefit of a good and the quantity of
that good consumed.
The marginal benefit curve slopes downward to reflect the principle of
decreasing marginal benefit.
At point A, with pizza production at 0.5 million, people are willing to pay 5 CDs
per pizza. At point E, with pizza production at 4.5 million, people are willing to
pay 1 CD per pizza. Fig 1.4 below
20. Efficient Use of Resources
When we cannot produce more of any one good without giving up some other
good, we have achieved production efficiency, and we are producing at a point
on the PPF.
When we cannot produce more of any one good without giving up some other
good that we value more highly, we have achieved allocative efficiency, and
we are producing at the point on the PPF that we prefer above all other
points. The following figure illustrates allocative efficiency. Fig 1.5 below
21. The point of allocative efficiency is the point on the PPF at which marginal
benefit equals marginal cost. This point is determined by the quantity at which
the marginal benefit curve intersects the marginal cost curve which is shown in
figure 1.6 below.
22. If we produce less than 2.5 million pizza, marginal benefit exceeds marginal
cost. We get more value from our resources by producing more pizza. Looking at
figure 1.7, on the PPF at point A, we are producing too many CDs, and we are
better off moving along the PPF to produce more pizza.
23. From Figure 1.5, if we produce more than 2.5 million pizzas, marginal cost
exceeds marginal benefit. We get more value from our resources by producing
less pizza. On the PPF at point C, we are producing too much pizza, and we are
better off moving along the PPF to produce less pizza.
Economic Growth
There are two factors that influence economic growth:
a) Technological Change- Development of new goods and improved ways to
manufacture new goods
b) Capital accumulation- Growth of capital resources,
includes human capital.
To use resources in research and development
we must decrease our production of consumption
goods and services.
24. We can produce pizza or pizza ovens along PPF0.
By using some resources to produce pizza ovens, the PPF shifts outward in the
future.
25. Gains from trade
Comparative Advantage
A person has a comparative advantage in an activity
if that person can perform the activity at a lower
opportunity cost than anyone else. In other words, it refers to the ability of
a party (an individual, a firm, or a country) to produce a product with the
highest relative efficiency given all the other products that could be
produced. It can be contrasted with absolute advantage which refers to the
ability of a party to produce a particular good at a lower absolute cost than
another.
Comparative advantage explains how trade can create value for both parties
even when one can produce all goods with fewer resources than the other. The
net benefits of such an outcome are called gains from trade. It is the main
concept of the pure theory of international trade.
26. Gains from trade continued…..
Table 1.1 Possibility
Discs (thousands per hour) Cases
(thousands per hour)
A 0 4
B 3 3
C 6 2
D 9 1
E 12 0
Production Without Trade
Suppose that Ace and Galaxy produce two components: case and discs.
Each firm produces its own cases and discs.
Total production at each factory is 3,000 CDs an hour. Table 1.1 shows their
production possibilities.
The table shows Ace‘s production possibilities.
Ace produces 3,000 discs and 3,000 cases at possibility B.
If Ace increases production of discs by 3,000 an hour, it must decrease
production of cases by 1,000.
27. Table 1.2 shows Galaxy‘s production possibilities. Possibility
Discs (thousands per hour) Cases (thousands per hour)
E' 0 12
D' 1 9
C' 2 6
B' 3 3
A' 4 0
Galaxy produces 3,000 discs and 3,000 cases at possibility B'.
If Galaxy increases production of discs by 1,000 an hour, it must decrease
production of cases by 3,000.
28. Differences in Opportunity Cost Fig 1.9 below
Ace can produce 3,000 discs and
3,000 cases at point B.
Along its PPF, Ace‘s opportunity
cost of a disc is 1/3 case and its
opportunity cost of a case is 3 discs.
Galaxy can produce 3,000 discs
and 3,000 cases at point B'.
Along its PPF, Galaxy‘s opportunity
cost of a disc is 3 cases and its
opportunity cost of a case is 1/3 of a
disc.
29. If Ace and Galaxy exchange cases
and discs at one case per disc (one
disc per case), they exchange along the
Trade line, figure 1.10.
Ace ends up at point F with 6,000
CDs—twice what it can achieve
without specialization and trade.
Galaxy ends up at point at point at
point F' with 6,000 CDs—twice
what it can achieve without specialization
and trade
Fig 1.10
30. Absolute Advantage
A person (or nation) has an absolute advantage if that person (or nation) can
produce more goods with a given amount of resources than another
person (or nation) can.
Because the gains from trade arise from comparative advantage, people can
gain from trade in they also have an absolute advantage.
Dynamic Comparative Advantage
Learning-by-doing occurs when a person (or nation) specializes and by
repeatedly producing a particular good or service becomes more
productive in that activity and lowers its opportunity cost of producing that
good over time.
Dynamic comparative advantage occurs when a person (or nation) gains a
comparative advantage from learning-by-doing.