...Chapter 1 introduces you to economics—the social science that studies how individuals, institutions, and society make the optimal best choices under conditions of scarcity. The first section of the chapter describes the three key features of the economic perspective. This perspective first recognizes that all choices involve costs and that these costs must be involved in an economic decision. The economic perspective also incorporates the view that to achieve a goal, people make decisions that reflect their purposeful self-interest. The third feature considers that people compare marginal benefits against marginal costs when making decisions and will choose the situation where the marginal benefit is greater than the marginal cost. You will develop a better understanding of these features as you read about the economic issues in this book. Economics relies heavily on the scientific method to develop theories and principles to explain the likely effects from human events and behavior. It involves gathering data, testing hypotheses, and developing theories and principles. In essence, economic theories and principles (and related terms such as laws and models) are generalizations about how the economic world works. Economists develop economic theories and principles at two levels. Microeconomics targets specific units in the economy. Studies at this level research such questions as how prices and output are determined for particular products and how consumers will react to price...
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...Exercise 1 Solution Chapter 1 Economics: Foundations and Models 1.1 Three Key Economic Ideas 1) Which of the following statements is true about scarcity? A) Scarcity refers to the situation in which unlimited wants exceed limited resources. B) Scarcity is not a problem for the wealthy. C) Scarcity is only a problem when a country has too large a population. D) Scarcity arises when there is a wide disparity in income distribution. Answer: A Comment: Recurring Diff: 1 Page Ref: 4/4 Topic: Scarcity Objective: LO1: Explain these three key economic ideas: People are rational. People respond to incentives. Optimal decisions are made at the margin. AACSB: Reflective Thinking Special Feature: None 2) By definition, economics is the study of A) how to make money in the stock market. B) how to make money in a market economy. C) the choices people make to attain their goals, given their scarce resources. D) supply and demand. Answer: C Comment: Recurring Diff: 1 Page Ref: 4/4 Topic: Scarcity Objective: LO1: Explain these three key economic ideas: People are rational. People respond to incentives. Optimal decisions are made at the margin. Special Feature: None 3) Where do economic agents such as individuals, firms and nations, interact with each other? A) in public locations monitored by the government B) in any arena that brings together buyers and sellers C) in any...
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...1 Introduction: What Is Economics? Chapter Summary Economics is about making choices when options are limited. Options in an economy are limited because the factors of production are limited. We can use economic analysis to understand the consequences of our choices as individuals, organizations, and society as a whole. Here are the main points of the chapter: • Most of modern economics is based on positive analysis, which answers the question “What is?” or “What will be?” Economists contribute to policy debates by conducting positive analyses about the consequences of alternative actions. • Normative analysis answers the question “What ought to be?” • The choices made by individuals, firms, and governments answer three questions: What products do we produce? How do we produce the products? Who consumes the products? • To think like economists, we (a) use assumptions to simplify, (b) use the notion of ceteris paribus to focus on the relationship between two variables, (c) think in marginal terms, and (d) assume that rational people respond to incentives. • We use macroeconomics to understand why economies grow, to understand economic fluctuations, and to make informed business decisions. • We use microeconomics to understand how markets work, to make personal and managerial decisions, and to evaluate the merits of public policies. Learning Objectives 1. 2. 3. 4. 5. List the three key economic questions. Discuss the insights from economics for a real-world problem such as...
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...Tutorial 1 Questions (based on Textbook End-of-Chapter Questions) Question 1 Refer to Q1.1 Chapter 2 (Page 118) What do economists mean by opportunity cost? According to this definition, is there anything that does not have an opportuntiy cost? Question 2 Refer to Q1.2 Chapter 1 (Page 78). What is scarcity? Why is scarcity central to the study of economics? Question 3 Refer to Q1.10 Chapter 1 (Page 79). In a paper written by Bentley College economists Patricia M. Flynn and Micheal A. Quinn, the authros state: “We find evidence that Economics is a good choice of major for those aspiring to become a CEO (Chief Executive Officer). When adjusting for size of the pool of graduates, those with undergraduate degrees in Economics are shown to have had a greater likelihood of becoming and S&P 500 CEO than any other major.” A list of famous Economics majors published by Marletta College inculdes business leaders Warren Buffet, Donald Trump, Ted Turner, Diane von Furstenberg, and Sam Walton, as well as former Presidents George H.W. Bush, Gerald Ford and Ronald Reagan. Why might studying economics be particularly good preparation for being that top manager of a corporation or a leader in government? Based on Patricia M. Flynn and Michael A. Quinn. “Economics: A Good Choice of Majorfor Future CEOs,” Social Science Research Network, November 28, 2006, and Famous Economics Majors, Marletta College, Marletta, Ohio, May 2, 2010. ...
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...CHAPTER 1 Utility: benefit obtained from a good. Marginal: change incurred from the last unit. Scarcity: a situation in which unlimited wants exceed the limited resources available to fulfill those wants. Economics: the study of the choices people make to attain their goal, given their scarce resources. Economic model: a simplified version of reality used to analyze real-world economic situations. Market: a group of buyers and sellers of a good or service and the institution or arrangement by which they come together to trade. Marginal analysis: analysis that involves comparing marginal benefits and marginal costs. Trade-off: the idea that because of scarcity, producing more of one good or service means producing less of another good or service. Opportunity cost: the highest valued alternative that must be given up to engage in an activity. Centrally planned economy: an economy in which the government decides how economic resources will be allocated. Market economy: an economy in which the decisions of households and firms interacting in markets allocate economic resources. Mixed economy: an economy in which most economic decisions result from the interaction of buyers and sellers in markets but in which the government plays a significant role in the allocation of resources. Productive efficiency: a situation in which a good or service is produced at the lowest possible cost. Allocative efficiency: a state of the economy in which production...
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...Contents 1. Introduction to Economics 1 What is Economics? 2 Studying of Choice in a World of Scarcity 4 The Cost-Benefit Principles 6 Absolute Advantage vs. Comparative Advantage 9 2. Law of Demand and Supply 13 Introduction to Demand and Supply 14 The Demand Curve 15 The Supply Curve 18 Market Equilibrium 21 Shift in Demand 25 Shift in Supply 26 3. Elasticity of Demand and Supply 29 Price Elasticity of Demand 30 Types of Elasticity of Demand 31 Determinants of Price Elasticity of Demand 34 Price Elasticity of Supply 38 Types of Elasticity of Supply 39 Determinants of Price Elasticity of Supply 41 4. International Trade 44 Introduction to International Trade 45 International Trade Restrictions 48 Arguments in Favour of Restricting Trade 53 Non-economic Arguments for Restricting Trade 56 Problems with Trade Protection 58 5. Market Structures 62 Introduction to Market Structure 63 Perfect Competition 65 Monopoly 68 Monopolistic Competition 72 6. Macroeconomics – GDP, Unemployment, Money and Central Bank 77 Introduction to Macroeconomics 78 GDP 81 Unemployment 84 Inflation 89 [pic] |Principles of Economics | |BM2 | A WORD OF WELCOME ...
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...CHAPTER I- NATURE, SCOPE AND METHODOLOGY IN ECONOMICS NATURE OF ECONOMICS ECONOMICS- Comes from the Greek oikonomia means management of a household, administration is a social science that deals with efficient allocation of scarce resources to satisfy the unlimited wants and needs. SOCIAL SCIENCE Is the field of scientific knowledge and academic scholarship that explore social groups and, more generally, human society RESOURCES Things use to produce other things to satisfy people wants WANT is something that is desired. It is said that people have unlimited wants, but limited resources NEED Is something that is necessary for survival (such as food and shelter) SCOPE OF ECONOMICS TWO MAJOR BRANCHES OF ECONOMICS MACROECONOMICS Examines either the economy as a whole or its basic subdivisions or aggregates, such as the government, household, and business sectors MICROECONOMICS Looks at specific economics units. At this level of analysis, the economist observes details of an economics unit, or very small segment of the economy ANALYTICAL TOOLS AND M ETHODOLOGY USED IN ECONOMICS rational self-interest means that given a certain condition, individuals try to minimize the expected cost for a benefit or maximize the expected benefit with a cost. Opportunity cost It is cost associated with opportunities that are foregone when...
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...CHAPTER ONE LIMITS, ALTERNATIVES, AND CHOICES CHAPTER OVERVIEW This chapter begins with a discussion of the meaning and importance of economics. In this first chapter, however, we will not plunge into problems and issues; instead we consider some important preliminaries. We first look at the economic perspective—how economists think about problems. Next, we examine the specific methods economists use to examine economic behavior and the economy, including distinguishing between macroeconomics and microeconomics. We then look at the economizing problem from both an individual and societal perspective. For the individual we develop the budget line, for society the production possibilities model. In our discussion of production possibilities, the concepts of opportunity costs and increasing opportunity costs, unemployment, growth, and present vs. future possibilities are all demonstrated. Finally, in the Last Word, some of the problems, limitations, and pitfalls that hinder sound economic reasoning are examined. The Appendix to Chapter 1 provides an important introduction to graphical analysis. While this will be review material for most students, for some this may be new. Instructors are strongly urged to confirm that their students understand this section before proceeding. The software supplement can provide effective remedial help for those students who are not familiar with graphical analysis, or just need a refresher. WHAT’S NEW There is a new learning objective...
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...Chapter 1: The Core Issues Dr. Yu ECON130 Principles of Microeconomics What Is the Economy? 1. The Economy is us. 2. It is the grand sum of all our production and consumption activities. 3. For the United States, it is the collective behavior of the 320 million individuals who participate in it. The Core Issues The purpose of an economy is to produce goods and services that satisfy peoples’ wants using the limited resources available. Wants Limited Resources Unlimited What do you want in your life? Scarcity: The Core Problem Scarcity: lack of enough resources to satisfy all desired uses of those resources. Three Core Issues What to produce with our limited resources How to produce the goods and services For whom goods and services are produced Factors or Production 1. 2. 3. Land labor Capital Entrepreneurship Goods produced for use in further production The assembling of resources to produce new or improved products and technologies All natural resources Skills and abilities of all humans at work 4. Land The entire material universe exclusive of people and their products. Capital Capital – goods produced for use in further production. • Future investment • Depreciate • More efficient technology Capital Money Quiz Labor Entrepreneurship Capital Land Economics Defined Economics: the study of how best to allocate scarce resources...
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...Geography 252 Review Chapter 1: A Geographical Approach to the Economy 1. Definitions · Map- is a visual representation of an area – a symbolic depiction highlighting relationships between elements of that space such as objects[->0], regions[->1], and themes[->2]. · Latitude- measures north and south of the equator · Longitude- measures east and west of the prime meridian · Meridian- A circle of constant longitude passing through a given place on the earth's surface and the terrestrial poles. · Globalization- the development of an increasingly integrated global[->3] economy marked especially by free trade, free flow of capital, and the tapping of cheaper foreign labor markets · Budget surplus/deficit-The Government budget balance is the overall result of a country's general government budget over the course of an accounting period[->4], usually one year. It includes all government levels (from national to local) and public social security funds. The budget balance is the difference between government revenues (e.g., tax) and spending. A positive balance is called a government budget surplus, and a negative balance is called a government budget deficit. 2. Critiques of Economic Geography · The IMF and the World Bank provide a specific list of factors that explain the country’s poverty: Limited resources, the climatic conditions, and the weak development of income-generating activities in rural areas, strong demographic...
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...Luz Figuereo Professor Allen Sauberman March 7, 2012 Paper #1 Chapter 1 Key Points: 1. Economics is the study of choices we make among our many wants and desires given our limited resources. 2. Self-interest is not the same as selfishness. For example, Mother Theresa who spent her life caring for others, her work could be considered done because of her self-interest but who would consider it selfish. 3. Ceteris Paribus which means “holding everything else constant”. Basically when trying to asses the effect of one variable on another, you must keep the relationship between the two variables isolated from other words. 4. Fallacy of composition states that if something holds true to one person it does not necessarily mean it would be true for many individuals in a group. 5. Positive statements are attempts to describe what happens and why it happens, while normative statements are attempts to prescribe what should be done. I understand what economics is and the basis of how and why economists try and predict the behavior of the consumers. How they observe, and come up with a hypothesis. I also understand the differences between macroeconomics and microeconomics. Lastly, what would be considered macro and what would be considered micro. Chapter 2 Key Points: 1. Human capital is the productive knowledge and skill people receive from education, on the job training, health and other factors that increase productivity. 2. Opportunity cost is the...
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...Principles of Macroeconomics, 9e - TB1 (Case/Fair/Oster) Chapter 2 The Economic Problem: Scarcity and Choice 2.1 Scarcity, Choice, and Opportunity Cost 1 Multiple Choice 1) The process by which resources are transformed into useful forms is A) capitalization. B) consumption. C) production. D) allocation. Answer: C Diff: 2 Topic: Scarcity, Choice, and Opportunity Cost Skill: Definition 2) Outputs in the production process are A) pollution. B) money. C) good and services of value to households. D) resources. Answer: C Diff: 2 Topic: Scarcity, Choice, and Opportunity Cost Skill: Definition 3) Which of the following is NOT a resource as the term is used by economists? A) land B) labor C) buildings D) money Answer: D Diff: 1 Topic: Scarcity, Choice, and Opportunity Cost Skill: Fact 4) Which of the following would an economist classify as capital? A) a $50 bill B) a corporate bond C) a post office employee D) a guitar used by a musician Answer: D Diff: 2 Topic: Scarcity, Choice, and Opportunity Cost Skill: Conceptual AACSB: Reflective Thinking 5) Capital, as economists use the term, A) is the money the firm spends...
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...Scarcity: A situation in which unlimited wants exceed the limited resources available to fulfill those wants. Economics: the study of the choices people make to attain their goals, given their scarce resources. Economic model: A simplified version of reality used to analyze real-world economic situations. Market: a group of buyers and sellers of a good or service and the institution or arrangement by which they come together to trade. Markets three important ideas:1.people are rational 2.People respond to economic incentives. 3.Optimal decisions are made at the margin. Marginal analysis:Analysis that involves comparing marginal benefits and marginal costs.. Trade-off: the idea that because of scarcity, producing more of one good or service means producing less of another good or service. Opportunity cost: the highest-valued that must be given up to engage in an activity. Three fundamental questions:1. What goods and services will be produced? Consumers, firms, and the government face the problem of scarcity by trading off on good or service for another. 2. How will the goods and services be produced? Firms may need to choose between a production method in the united state that uses fewer workers and more machines and a production method in china that uses more workers and fewer machines. 3. Who will receive the goods and services produced? People are willing to give up some of their income-and, therefore, some of their ability to purchase goods and services- by donating...
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...Problems and Prospects of Remittance Service in the Public Banking Sectors of Bangladesh (A study on Janata Bank Limited) [This internship report has been prepared as a partial fulfillment of the degree of Bachelor of Business Administration from Daffodil International University] SUBMITTED TO SheikhAbdur Rahim Assistant Proffesor Department of Business Administration Daffodil International University SUBMITTED BY Date of Submission: 2012 DAFFODIL INTERNATIONAL UNIVERSITY © Daffodil International University Library Page i Letter of Transmittal January, 2012 SheakAbdur Rahim Lecturer in Department of Business Administration Daffodil International University Subject: Submission of internship report for kind acceptance Dear Sir I am profoundly contended for being able to submit Internship Report on “Problem & prospects of remittance service in public banking sectors of Bangladesh (A case study on Janata Bank Limited)”which you have assigned me as partial requirement of BBA program. I have tried no stone unturned to prepare this report sincerely according to your advice, guidance, instructions and suggestions. It was a great source of inspiration and pleasure for me to work on this report. I shall be very glad to furnish with any explanation on this report necessary. Despite my great caution, I cannot but express my great concern to make any sort of mistakes. If such condition takes place, I would expect your sympathetic and graceful consideration...
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...Microeconomics 8/27/14 Economics is a social science that studies how people allocate their limited resources to satisfy their unlimited wants Microeconomics consist of consumers, firms, individual markets Examples: a sales tax on the cigarette industry, agricultural price support programs on the cotton industry Macroeconomics consist of economy as a whole (economic growth, inflation, unemployment), how economies interact Examples: an increasing inflation rate on national living standards, an increasing inflation rate on national living standards, Obamacare Economic models- Model: a simplified representation of reality Graphs and equations The Circular-Flow Diagram • Households – Consume goods and services – Own factors of production (e.g. labor) • Firms: – Produce goods and services Learn the Role of consumers and firms • Importance of markets • Economic agents are interrelated Does not include government, international markets, unemployment, raw materials, non-profits, banks or bank regulators, no illegal activities Course Outline • Markets – Gains from Trade – Supply and Demand – Efficiency of Markets – Price Controls, Taxes • Consumers and Producers – Making Decisions • What if markets fail? – Monopolies, Externalities, Public Goods Microeconomics Notes 8/29/14 • Today: –Opportunity cost – Production possibility frontier –Gains from trade • Scarcity – trade-offs • Making choices: compare benefits and costs Opportunity cost: what you...
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