Lecture microeconomics chapter 1 introduction to economics

ECO107 MICROECONOMICS Lecturer: MSc Nguyen Thuy Dung Faculty of Accounting, Banking and Finance www.hutech.edu.vn/quocte SYLLABUS Course objectives: to improve economic literacy as well as critical thinking and problem solving skills to explain and predict economic issues Student task: Class attendance: missing more than classes – abandon from the final exam Actively participate in-class activity Complete all homework (if any) and other tasks Don‟t have private conversation or arrive at class late HUTECH Institute of International Education SYLLABUS COURSE GRADE Midterm test: 30%, including multiple choice and short-answer questions, individual Final exam: 70% - Final Examination Mode: Essay - Duration: 90 minutes - Students are NOT allowed to use materials HUTECH Institute of International Education COURSE GRADE BOOKS AND READING Mankiw, N G., (2015) Principles of Economics – 7th edition, CENGAGE Learning Lecturer‟s slides https://sites.google.com/site/nguyendungscorner/ Email: nguyendung3691@gmail.com Home page HUTECH Institute of International Education BOOKS & READINGS FYI: HOW TO READ YOUR TEXTBOOK 1.Read before class 2.Summarize, don‟t highlight 3.Test yourself Try “Quick Quiz” that follows each section 4.Don‟t skip the real world examples HUTECH Institute of International Education BOOKS & READINGS CONTENTS 03 04 05 INTRODUCTION SUPPLY AND TO ECONOMICS DEMAND ELASTICITY OF SUPPLY AND DEMAND SUPPLY, DEMAND AND GOVERNMENT POLICIES CONSUMERS, PRODUCERS AND MARKET EFFICIENCY 06 07 08 09 10 THE COST OF PRODUCTION COMPETITIVE MARKETS MONOPOLY MONOPOLISTIC OLIGOPOLY COMPETITION 01 02 HUTECH Institute of International Education CONTENTS INTRODUCTION TO ECONOMICS Topics to be discussed 1.1 PRINCIPLES OF ECONOMICS 1.2 THINKING LIKE AN ECONOMIST 1.3 INTERDEPENDENCE AND GAIN FROM TRADE HUTECH Institute of International Education Introduction to Economics 1.1 PRINCIPLES OF ECONOMICS In this section, look for answers for these questions:  What kinds address? of questions does economics  What are the principles of how people make decisions and interact with another?  What are forces and trends that affect the economy as a whole? HUTECH Institute of International Education Needs and wants To satisfy needs and wants, people have to consume products and services HUTECH Institute of International Education Introduction to Economics Resources Inputs used to produce products and services to fulfill people‟s needs and wants LAND Natural resources available for production of goods and services ENTREPRENEURSHIP Refer to the management, organization and planning of the other three factors of production HUTECH Institute of International Education LABOUR Physical and mental effort of people used in production CAPITAL All non-natural resources that are used in the creation and production of other products Introduction to Economics Resources Land Labour Capital Entrepreneurship organizes resources to produce goods and services HUTECH Institute of International Education Introduction to Economics Scarcity Refers to the situation of having unlimited human wants in a world of limited resources HUTECH Institute of International Education Introduction to Economics The Economic Problem? •Unlimited Wants •Scarce Resources – Land, Labour, Entrepreneurship •Choices - Capital, What we want (need) versus what we can give up (live without) What Economics Is All About? • Economics is the study of the choices people and societies make to obtain their unlimited wants, given their scarce resources • In this subject we study how people make choices and interact in markets HUTECH Institute of International Education Introduction to Economics What Economics Is All About? Economics is the study of how society manages its scarce resources basic economic problems HUTECH Institute of International Education Introduction to Economics 10 Principles of Economics  HOW PEOPLE MAKE DECISIONS People face tradeoffs Opportunity cost Rational people think at a margin People respond to incentives HUTECH Institute of International Education  HOW PEOPLE INTERACT Trade Can Make Everyone Better Off Market Organizes Economic Activity Governments Can Improve Market Outcomes Introduction to Economics 10 Principles of Economics  HOW THE ECONOMY AS A WHOLE WORKS A Country‟s Standard of Living Depends on Its Ability to Produce Goods & Services Prices Rise When the Government Prints Too Much Money Society Faces a Short-run Tradeoff Between Inflation and Unemployment HUTECH Institute of International Education Introduction to Economics principles of HOW PEOPLE MAKE DECISIONS HUTECH Institute of International Education Introduction to Economics HOW PEOPLE MAKE DECISION Principle #1: People Face Tradeoffs • Choice involves sacrifice, meaning choosing one thing means leaving the other things → All decisions involve tradeoffs • Opportunity cost refers to the cost of an activity measured in terms of the best alternative forgone HUTECH Institute of International Education Introduction to Economics HOW PEOPLE MAKE DECISION Principle #1: People Face Tradeoffs • Important tradeoff: “efficiency” vs “equality” Efficiency: means that society is getting the maximum benefits from its scarce resources Equality: means that those benefits are distributed uniformly among society‟s members → Tradeoff: To achieve greater equality, could redistribute income from wealthy to poor But this reduces incentive to work HUTECH Institute of International Education Introduction to Economics ... COMPETITION 01 02 HUTECH Institute of International Education CONTENTS INTRODUCTION TO ECONOMICS Topics to be discussed 1. 1 PRINCIPLES OF ECONOMICS 1. 2 THINKING LIKE AN ECONOMIST 1. 3 INTERDEPENDENCE... International Education Introduction to Economics 1. 1 PRINCIPLES OF ECONOMICS In this section, look for answers for these questions:  What kinds address? of questions does economics  What are... products Introduction to Economics Resources Land Labour Capital Entrepreneurship organizes resources to produce goods and services HUTECH Institute of International Education Introduction to Economics