Transcript Economics
Content Part I What is economics? Part II Consumption, Production & Exchange Part III Market structure Part IV Factor market Part V Market Coordination & Efficiency Chapter 1 Nature of Economics 1 Part I What is economics? Chapter 1 Chapter 2 Chapter 3 Chapter 4 Nature of Economics Scarcity & Competition Supply, Demand & Price Methodology of Economics Chapter 1 Nature of Economics 2 Learning Objectives What is Economics? Micro vs. Macro Economics Policy Chapter 1 Nature of Economics 3 Learning Objectives What is Economics? Micro vs. Macro Economics Policy Chapter 1 Nature of Economics 4 PRODUCTION CONSUMPTION Production of goods and services Consumption of goods and services COORDINATION Coordination of production and consumption Question What are economic issues? Social Issues Unemployment Inflation International Trade Falling/Rising of Prices of Residential Flats Education Pollution Crime rate Public Health Single Parent Families Economic Issues? Yes! What is Economics? Economics is a social science that attempts to explain and predict human behaviour within a market. Chapter 1 Nature of Economics 9 Question What are the differences between natural science and social science? What is Economics? Natural Sciences are disciplines that deal with the objects, phenomena or the laws of nature and the physical world. Examples: biology, chemistry,and physics. Chapter 1 Nature of Economics 11 What is Economics? Social sciences are scholarly or scientific disciplines that deal with the study of society and individual relationships, within it. Examples: sociology, psychology, anthropology, economics, political science and history. Chapter 1 Nature of Economics 12 Question What is the major characteristics of a ‘science’ subject? What is Economics? Science use scientific models and theories to make predictions and explaining phenomena. Chapter 1 Nature of Economics 14 What is Economics? There are 2 major problems faced by social scientists or economists: 1. It is difficult or impossible to conduct a controlled experiment. 2. Human behaviour can be distorted by human will. Chapter 1 Nature of Economics 15 Learning Objectives What is Economics? Micro vs. Macro Economics Policy Chapter 1 Nature of Economics 16 Micro vs. Macro Economics is traditionally divided into two main branches: – Microeconomics – Macroeconomics Chapter 1 Nature of Economics 17 Macroeconomics Microeconomics Micro vs. Macro Microeconomics is concerned with individual decisions, and the units of investigation are individuals in the economy. Macroeconomics is concerned with the economy as a whole. It is the study of economic aggregates such as unemployment, inflation, growth and the balance of payments. Chapter 1 Nature of Economics 19 Learning Objectives What is Economics? Micro vs. Macro Economics Policy Chapter 1 Nature of Economics 20 Social Issues Unemployment Inflation International Trade Falling/Rising of Prices of Residential Flats Education Pollution Crime rate Public Health Single Parent Families Economic Issues? Yes! Example Should the government increase the places of university? Do we have enough money to finance the additional university places during recession? Shall we raise the school fee? Economics Policy To answer those questions, we have to differentiate 2 different types of issues: – Normative issue – Positive issue Chapter 1 Nature of Economics 23 Economics Policy Normative statement is a statement of value. It is a statement about what ought to be or ought not to be, about whether something is good or bad, desirable or undesirable. Examples: you should keep quiet in the classroom, you are pretty. Chapter 1 Nature of Economics 24 Economics Policy Positive statement is a statement of fact. It can be right or wrong, and its validity can be verified by appealing to facts. Examples: this is a blackboard, you get 80 marks in your examination Chapter 1 Nature of Economics 25 Issue The government should reduce the unemployment rate. The unemployment rate will increase if the government raises the tax rate. The price will rise if the supply decreases. The oil prices should be lower. Normative Positive Issue The government should reduce the unemployment rate. The unemployment rate will increase if the government raises the tax rate. The price will rise if the supply decreases. The oil prices should be lower. Normative Positive