Transcript Lecture1.OVERVIEW

LECTURE ONE
Text book:
Economics by Hubbard, R. Glenn, and Anthony Patrick
O’Brien Economics. 3rd ed. Pearson
Reference book:
Economics by Campbell R. McConnell and Stanley L. Brue,
McGraw Hill Publication
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Lecture note is prepared by Sayed Hossain,
Instructor for Economics,
North Central Texas College,
Personal website: www.sayedhossain.com
E-mail: [email protected]
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What is demand?
1. Willingness to buy a product
2. Ability to pay for the product
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Who spends in the economy?
1.
2.
3.
4.
Consumption by households (C)
Investment by business (I)
Government spending (G)
Net Export (Xn)= Export (X)-Import (M)
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Define Economics
A study of the choices people make to attain their
goals, given their scare resources.
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Microeconomics
The study of how households and firms
make choices, how they interact in markets,
and how the government attempts to
influence their choices.
Macroeconomics
Is the study of the economy as a whole,
including topics such as inflation,
unemployment and economic growth.
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Types of Economy
Centrally planned economy
An economy in which the government
decides how economic resources will be
allocated.
Market economy
An economy in which the decision of
households and firms interacting in market
allocate resources.
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Mixed Economy
An economy in which most economic
decisions result from the interaction of
buyers and sellers in a market but
Government also play significant role in the
allocation of resources.
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Three Questions
1.What goods and services will be produced?
2. How will the goods and services be
produced?
3. Who will receive the goods and services
produced?
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Circular flow of income
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Circular flow of income
A household consists of all the individuals
in a home. Households are supplying factors
of production such as labor, entrepreneural
ability and other factors of productions to
firms through Factor Market.
Firms use these factors of production to
make goods and services that they supply to
households through Product Market.
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Circular flow of income
Households receive the income from selling
the factors of production and purchase
goods and services supplied by firms
through Product Market.
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Payment for
goods
and services
Circular flow of income
Households
Goods and
services
Product
Market
Income
from selling
Firms
Goods and
services
Wages,
other
payments
Labor, capital,
natural
Resources,
entrepreneural
ability
Factor
Markets
Labor, capital,
natural
Resources,
entrepreneural
ability
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Production Possibility Frontier
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Production Possibility Frontier
A production possibility frontier is a curve
showing the maximum attainable
combinations of two products that may be
produced with available resources and current
technology.
What is resources?
For example: workers, materials, robots,
machinery etc
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Production Possibility Frontier
Cotton
0
Soybeans
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Production Possibility Frontier
Cotton
0
Soybeans
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Production Possibility Frontier
Cotton
0
Soybeans
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Production Possibility Frontier
Cotton
0
Soybeans
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Thank you for your patience
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