Lecture Macro economic: Chapter 1 - Lương Mỹ Thùy Dương

Lecture "Macro economic: Chapter 1" provides students with the knowledge: Economic concept and economic systems, the market Forces of Supply and Demand, the theory of consumer choice, the Costs of production, competitive Markets Firms print,... You are invited the same reference.

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Lecture Macro economic: Chapter 1 - Lương Mỹ Thùy DươngMicroEconomicLecturer: LƯƠNG MỸ THÙY DƯƠNG MicroEconomic Topic 1: Economic concept and Economic systems Topic 2: The Market Forces of Supply and Demand Topic 3: The Theory of Consumer Choice Topic 4: The Costs of Production Topic 5: Firms in Competitive Markets Topic 6: Monopoly Topic 7:BookMonopolistic© McGraw-Hill Company Australia, 1999 Competition and Oligopoly PPS t/a Economics for Business 2/e 1-2 REFERENCE BOOKS1-Economics for Business – Lan Fraser – John Glonea – Simon Fraser.2-Economics – Paul A. Samuelson and William D. Nordhaus.3-Kinh tế Vi mô - Trường Đại học Công nghiệp TP.HCM4-Kinh tế Vi mô - Trường Đại học Kinh tế TP.HCM.5-Nguyên lý kinh tế học – David Begg.Economic Concepts Topic Plan• Economic concept.• Basic Economic Problems.• Economic Systems.What is Economics ? EconomicsIs the study of how societies use scarceresources to produce valuablecommodities and distribute them amongdifferent people. Scarcity• Resources are scarce in relation to the unlimited needs and wants of consumers. Resources• Also called Factors of Production• All inputs which are used in the production and distribution of goods and services. Types of Resources1. LAND :All natural endowments.Examples- soils, crops, minerals2. LABOUR :Physical and mental work of people.Examples- teachers Types of Resources3. CAPITAL :Any good used to produce others.Examples- Factories, machinery4. ENTERPRISE :Management of the other three factors of production.Examples- Business managers Characteristics of Resources• Scarce• Have alternative uses• Quantity of a resource varies• Quality of a resource varies Needs and WantsNeeds: goods/services essential for survival.Wants: goods/services desired by consumers.Characteristics:• Unlimited• Recurrent• Complementary• Changeable Satisfying Needs and WantsProduction Distribution Consumption Production Possibility Theory• A simplified economic model which portrays scarcity, choice and opportunity cost.The Static Production Possibility Frontier• Analyses the economy at a fixed point in time• Is based on the following assumptions: – There is a fixed quantity of resources – The economy only produces 2 products – Resources can be used interchangeably – All resources within the economy are used – Resources are used at maximum efficiencyAn example of the Static PPF model Production Possibility Schedule A B C D ETractors 0 100 200 300 400VCRs 800 600 400 200 0 The PPF Graph E PPF 400- D 300-Tractors C 200- B 100- A 200 400 600 800 Video Recorders Maximum Output Levels• The PPF shows the maximum output of the economy.• If the economy devoted all of its resources to the production of VCRs it is able to produce 800 (+ zero tractors) - Production Possibility A.• Alternatively, if the economy chooses Production Possibility C it is able to produce 200 tractors and 400 VCRs. Opportunity CostThe sacrifice in choosing to satisfyone need or want rather than another(the alternative forgone). Opportunity Costs• The PPF shows that to produce more of one product means producing less of another.• Opportunity costs of production can be measured eg if the economy moves from point C to D (along the PPF) it will produce an extra 100 tractors BUT 200 VCR’s must be sacrificed.• Hence the opportunity cost is 200 VCR’s.