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New economics
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- 2. What is economics? •It’s a social science. • It concerns the production of wealth and the distribution of wealth between different countries and different agents. • The economy allows you to analyze different situations through the models. Line chart Pie chart Histogram, bar chart
- 3. It is madeup of: • Microeconomics: it deals with the behaviour of single economic agents • Macroeconomics: it deals with the behaviour of the economy as a whole
- 4. What is economicsabout? • It shows how consumers satisfy the needs (of primary goods) and the wants (of secondary goods) through goods and services • It shows the economic connection among many agents
- 5. Why is itimportant to study economics? • Every rational agent knows all the available alternatives very well and tries to get the best result from his actions.
- 7. Who are theagents? • Households • Firms • Government • Banks • The rest of the world • Look at this video
- 8. Who are theagents? • ……so economic activity takes place within societies to satisfy the needs and the wants of the consumers!! if there were no needs, there would be no economy!
- 9. • Primary needsare also called NEEDS because we cannot live without them and they are essential for our existence. They are: • Food; • Clothing; • Shelter;
- 10. • Secondary needsare also called WANTS because we do not really need them. They are: • Cars; • Phones; • Holidays; • Computers; • Sport; Life is much easier with these comforts!
- 11. Needs and wants •Our idea of needs and wants is always changing. • As a result of consumers’ increased demands (request) the market now offers (supply) an enormous number of different products. • There are two main types of products: goods and services
- 12. Goods are physicalobjects we can either see or touch. They can be divided into 2 categories: • Non-durable goods (newspapers, tobacco) • Durable goods (cars, furniture)
- 13. • DIRECT: useddirectly to satisfy an immediate need (sandwiches); • INSTRUMENTAL: used to produce more goods (wool→ sweaters); • COMPLEMENTARY: goods that better satisfy a need if used together (coffee + sugar) • SURROGATES: different goods that satisfy the same need (butter and margarine). • click here to play
- 14. Services are non-physicalproducts; they are: tourism, education, transport. Services are performances that can be used to satisfy people’s needs.
- 15. PRODUCTION • ….to satisfyneeds and wants it is necessary to produce some goods and services
- 16. The meaning of“production”: • Production is the activity that makes use of natural goods to satisfy people’s needs. • A lot of goods can’t be used when they are in their natural state, so they have to be transformed through work and machineries in order to be useful or more useful.
- 17. Production stages • Turningraw materials into finished products • Carrying them from the place of production to the place of consumption • Enabling consumers to buy them where and when they want
- 19. IMPORTANT!!!!! • The productionfactors are in short supply. As a result, it is important to use resources efficiently, in order to maximise the output that can be produced from them
- 20. Land or naturalresources We find them in nature, for example mineral, water, solar power, wood etc. Natural resources are fundamental for the production of all goods
- 21. Labour In economics, labouris the work carried out by human beings. So it refers to the number of people working and to their skills.
- 22. Capital It is themoney invested to run a business. It is used to build factories, machinery, vehicles, buildings and equipment and anything that is needed to produce goods or services (this is what makes it a factor of production).
- 23. Organization It is thephase that coordinates all the factors. Through the organization an enterprise combines the factors to obtain the most favorable economic results.
- 25. Economics sectors Business activity is theprocess of transforming inputs into outputs by adding value. There are four main sectors of business activity:
- 26. PRIMARY SECTOR It includesbusiness organisation regarding the production or extraction of raw materials from natural sources
- 27. Industries in theprimary sector include: • Farming and agriculture • Forestry • Fishing • Oil extraction • Mineral extraction
- 28. decline • There isa constant decline in employment in many primary activities, due to the use of new technologies.
- 29. SECONDARY SECTOR • Itincludes manufacturing industries which make finished products as well as construction industries.
- 30. Industries in thesecondary sector include: • Metal and mineral products • Chemicals and artificial fibres • Engineering and car production • Food, drink and tobacco • Textiles, clothing • Building • Civil engineering (roads, etc.)
- 31. Declining in secondarysector.. • Employment in the secondary sector is declining too, due to the competition from newly industrialised countries in the Far East, such as China, Taiwan etc.
- 32. TERTIARY SECTOR • Itincludes service industries that get their name because they provide a service rather than a product.
- 33. Industries in thetertiary sector include: • Retailing • Distribution • Hotels and catering • Banking and financial services • Post and telecommunications • Education • Health services • Public administration
- 34. Tertiary advanced sector Theadvanced tertiary sector is represented by new information technologies. Companies dealing with telecommunications, information technologies, media consulting services, and information processing are all part of the advanced tertiary sector. The term “advanced tertiary” was coined in the last decades to distinguish between the companies offering service at low value-added from those working at high technological level.