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Lecture 3 Economics. Economics. Definitions. Economics A Social Science Concerned with How Scare Resources Are Allocated Microeconomics Study of Individual Level Economic Macroeconomics Study of National Level Economics. Microeconomics. Formed Around of Supply and Demand Demand
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Lecture 3 Economics
Definitions Economics A Social Science Concerned with How Scare Resources Are Allocated Microeconomics Study of Individual Level Economic Macroeconomics Study of National Level Economics
Microeconomics Formed Around of Supply and Demand Demand The Consumer’s Willingness and Ability to Acquire Goods and Services Supply The Supplier’s Willingness and Ability to Provide Goods and Services Equilibrium Point where Supply Equals Demand
Supply and Demand Curves Supply Curve – Parallel Relationship As the Price of Goods and Services Increases, Supply Increases As the Price of Goods and Services Decreases, Supply Decreases Demand Curve – Inverse Relationship As the Price of Goods and Services Decreases, Demand Increases As the Price of Goods and Services Increases, Demand Decreases
Shifts in Supply and Demand Shift in Supply Curve Shift Depending upon Costs of Inputs and Factors of Production, Cost of Technology, Taxes, and Number of Suppliers Shift in Demand Curve Shift Depending upon Customer Preferences, Buyer’s Incomes, Price of Complementary and Substitute Goods, and Future Expectations
Economic Systems Communism Government Controls All Industries; No Private Ownership Socialism Government Controls Major Industries; Some Private Ownership Capitalism No Government Control of Industries; Only Private Ownership Mixed Economy Mix of Private Ownership with Some Government Oversight
Private Enterprise System Market Economy or Capitalism Four Types of Competition Pure Competition -Similar Products, Many Competitors Monopolistic Competition -Different Products, Few to Many Competitors Oligopoly - Similar or Different Products, Very Few Competitors Monopoly - No Competing Products or Competitors, Government Regulated
Degrees of Competition No Competition Much Competition Monopolistic Competition Perfect Competition Oligopoly Monopoly
Economic Performance Business Cycle Cycle of Growth and Decline Gross Domestic Product Sum of Goods and Services Produced Consumer Price Index Average Change in Price of Goods Unemployment Percentage of Workforce Actively Seeking Work
Consumer Price Index CPI Basket
Managing the Economy Monetary Policy Increasing or Decreasing the Supply of Money in an Economy Fiscal Policy Government Activities in Spending and Taxation Includes Federal Budget Foreign Country Debt Forgiveness
Challenges • United States Information Economy Losing Manufacturing Jobs • Less Developed Countries Becoming More Competitive with Technology • Aging Population in Western Europe and US with Dwindling Birth Rates • China and India Now One-Third of World’s Population • World Held Hostage by Terrorism
Lecture 3 Economics