1 / 14

Chapter 1 Economics and the Economy

Chapter 1 Economics and the Economy. David Begg, Stanley Fischer and Rudiger Dornbusch, Economics , 8th Edition, McGraw-Hill Education, 2005 PowerPoint presentation by Alex Tackie and Damian Ward. What is Economics?. ECONOMICS ... is the study of how society decides: What For whom How.

kenyon
Download Presentation

Chapter 1 Economics and the Economy

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Chapter 1Economics and the Economy David Begg, Stanley Fischer and Rudiger Dornbusch, Economics, 8th Edition, McGraw-Hill Education, 2005 PowerPoint presentation by Alex Tackie and Damian Ward

  2. What is Economics? • ECONOMICS ... • is the study of how society decides: • What • For whom • How to produce...

  3. The price of oil Tripled in 1973-74, and doubled again in 1979-80 … and affected people all over the world.

  4. An increase in the price of oil affects • What to produce • less oil-intensive products • How to produce • less oil-intensive techniques • For whom to produce • oil producers have more buying power, importers have less

  5. The distribution of world population and GNP, 2003

  6. Scarcity forces choices to be made • Opportunity cost • a crucial concept in economic analysis • the quantity of other goods that must be sacrificed to obtain another unit of a good

  7. The production possibility frontier (1) • For each level of the output of one good, the production possibility frontier shows the maximum amount of the other good that can be produced.

  8. A  14 F= 4  B Food output (F) 10 G = 8 Production possibility frontier 14 6 Film output (G) The production possibility frontier (2) F/G = opportunity cost (=1/2)

  9. The operation of markets • Market • a shorthand expression for the process by which … • households’ decisions about consumption of alternative goods • firms’ decisions about what and how to produce • and workers’ decisions about how much and for whom to work • … are all reconciled by adjustment of prices

  10. Resource allocation • Resource allocation is crucial for a society • and is handled in different ways in different societies, e.g.: • Command economy • Mixed economy • Free market

  11. China Sweden USA Hungary UK Cuba Free market economy Command economy Market orientation

  12. Normative and Positive Economics • Positive economics deals with objective explanation • e.g. if a tax is imposed on a good its price will tend to rise • Normative economics offers prescriptions based on value judgements • e.g. a tax should be imposed on tobacco to discourage smoking

  13. Micro and Macro (1) • Microeconomics • offers a detailed treatment of individual economic decisions concerning particular commodities • Footballers’ wages and the price of oil, for example, are both microeconomic issues

  14. Micro and Macro (2) • Macroeconomics • emphasises the interactions in the economy as a whole • Gross domestic product, the aggregate price level and unemployment, for example, are all macroeconomic issues

More Related