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University of Hail

University of Hail. Department of Computer Science & Software Engineering Software Engineering Economics (ECON 403). Mahdi H Miraz. Email: m.miraz@uoh.edu.sa Room: Portable-4, Room- 2 ECON403: Section 001 (Boys) Section 101 (Girls). BASIC AXIOMS OF ECONOMICS.

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University of Hail

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  1. University of Hail Department of Computer Science & Software Engineering Software Engineering Economics (ECON 403)

  2. Mahdi H Miraz • Email: m.miraz@uoh.edu.sa • Room: Portable-4, Room- 2 • ECON403: • Section 001 (Boys) • Section 101 (Girls)

  3. BASIC AXIOMS OF ECONOMICS • Generic constraints of Resource Scarcity • Unlimited Demanding Behaviours of Consumers • Profit Driven Behaviour of producers • The conservative behaviors of market systems

  4. Scarcity Scarcity refers to the tension between our limited resources and our unlimited wants and needs. For an individual, resources include time, money and skill. For a country, limited resources include natural resources, capital, labor force and technology.

  5. The principle of resource scarcity The principle of resource scarcity states that the total resources at a given time RΣ(t), or the means of production represented by their values, such as land Vl(t), building Vb(t), materials Vm(t), labor Vlb(t),and capital Vc(t), are constrained by a constant of nature k(t), which is always inadequate to meet the ever growing total demands DΣ(t). RΣ(t) = Vl(t) + Vb(t) + Vm(t) + Vlb(t) + Vc(t) = k(t) < DΣ(t)

  6. The Law of profit Maximizing Pmax(t) = Rmax(t) - Cmin(t)

  7. Opportunity Cost Opportunity cost is the value of what is foregone in order to have something else. This value is unique for each individual.

  8. Demand Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship.

  9. Supply Supply represents how much the market can offer. The quantity supplied refers to the amount of a certain good producers are willing to supply when receiving a certain price. The correlation between price and how much of a good or service is supplied to the market is known as the supply relationship. Price, therefore, is a reflection of supply and demand.

  10. The Demand Law The higher the price, the lower the quantity demanded.

  11. This means that the higher the price, the higher the quantity supplied

  12. Equilibrium When supply and demand are equal (i.e. when the supply function and demand function intersect) the economy is said to be at equilibrium.

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