Professional Documents
Culture Documents
Recommended Reading:
1) Griffiths, A., Wall, S., 2011, Economics for Business
and Management. London: Pearson Education Ltd
2) Sloman, J., Sutcliffe, M., 2004. Economics for
Business. FT- Prentice Hall
3) Parkin M., 2008. Economics. Addison-Wesley
4) Samuelson, P.A., Nordhaus, W.D., 2005. Economics.
McGraw-Hill
5) Perkins, D, Radelet, S, Lindauer, D., 2006. Economics
of Development. New York: W.W. Norton
Economics:
Micro Economics: analyse the behaviour of individual
entities such as markets, firms and household
A. Smith: The Wealth of Nations (1776)
Economics - Definition
Economics is the study
of how societies use scarce resources
to produce goods and services and distribute
them among different people
Scarce resources:
Natural resources: Land, oil, gas, materials
Human resources: Labour, capacities, abilities
Monetary resource: Money, capital
Production activity: combine scarce resources (input) to obtain goods
and services (output)
Distribution: who can use the goods and services? distribution is an
ethical issue
Economic Problems
1. What combination of goods to produce?
resources are scarce which goods have to be produced?
satisfaction + maximum utility)
Since
(needs
Trade-Off
Economy is defined by the existence of Trade-Off
between:
-Utility (satisfaction)
-Costs
-Availability of resources, good and services, money
-.
Economy is matter of CHOICES and COMPROMISES
Tax
Government
Services
Services
Price
Goods, Services
Businesses
Households
Labour
Salaries
Natural Environment
Natural
Resource
2. Consumer choices:
Households budget
Utility
Equilibrium
3. Market organization:
Free market
Monopoly
Oligopoly
4. Market failures:
Externalities
Property rights
Demand
If you demand something then you:
Want it: are the unlimited desires or wishes that people have for goods and
services
Can afford it: be able to pay Scarcity
Demand
Law of demand:
When the price of a
commodity is raised
buyers tend to buy
less of the commodity
When the price is
lowered, quantity
demanded increases
Law of Demand
Why does a higher price reduce the quantity demanded:
Substitution Effect: when the price of a good rises, consumers will
substitute other similar goods for it
Income Effect: a hither price reduces the quantity demanded
Supply
The supply side of the market involves the terms on which businesses
produce and sell their products
Law of supply:
When the price of a commodity is raised sellers tend to sell more
of the commodity
When the price is lowered, the quantity that is offered decrease
Supply
Law of supply:
When the price of a
commodity is raised
sellers tend to sell
more of the
commodity
When the price is
lowered, the quantity
that is offered
decrease
Law of Supply
What determine changes in supply?
Qx
Px
Qx