Economy Notes
CHAPTER 1 ( INTRODUCTION
1.1 DISCIPLINE OF ECONOMICS THEORY
There are two different categories concerning economic behavior, the micro economics and macro economics.
Micro economics The study of economic behavior of individual making units such as producer, consumer, household, and firms.
Macro economics The study of economic system as a whole or on the basis of aggregate such as consumer price index, inflation rate, national income and unemployment level.
1.2 DEFINITION OF ECONOMICS
Conventional perspective
Definition A study of how societies make use of scarce resources to fulfill their unlimited wants.
Scarce resources refer to the limited factors of production, which are; Land Labor Capital Entrepreneur
Unlimited wants refer to the behavior of man to maximize satisfaction/utility.
Main focus
Maximization of society’s material welfare.
Consumers maximize satisfaction/utility Producers maximize profits Owners of resources maximize returns
Conclusion
• Attainment of maximum worldly satisfaction • Discusses the economic problems as they are (normative) not what they ought to be (positive) • Not concerned with value judgment and spiritual well being • Disregard the influence of religion values on economic activities
1.3 ECONOMIC CONCEPTS
I. Scarcity The excess of human wants over what can actually be produced from the limited resources.
Conventional perspective
Land –Inputs into production that are provided by nature such as raw materials from the surface of earth, mineral and oil deposits. The reward is rent. Labor – All forms of human input, both physical and mental, into current production. The reward is wage. Capital – All
1.1 DISCIPLINE OF ECONOMICS THEORY
There are two different categories concerning economic behavior, the micro economics and macro economics.
Micro economics The study of economic behavior of individual making units such as producer, consumer, household, and firms.
Macro economics The study of economic system as a whole or on the basis of aggregate such as consumer price index, inflation rate, national income and unemployment level.
1.2 DEFINITION OF ECONOMICS
Conventional perspective
Definition A study of how societies make use of scarce resources to fulfill their unlimited wants.
Scarce resources refer to the limited factors of production, which are; Land Labor Capital Entrepreneur
Unlimited wants refer to the behavior of man to maximize satisfaction/utility.
Main focus
Maximization of society’s material welfare.
Consumers maximize satisfaction/utility Producers maximize profits Owners of resources maximize returns
Conclusion
• Attainment of maximum worldly satisfaction • Discusses the economic problems as they are (normative) not what they ought to be (positive) • Not concerned with value judgment and spiritual well being • Disregard the influence of religion values on economic activities
1.3 ECONOMIC CONCEPTS
I. Scarcity The excess of human wants over what can actually be produced from the limited resources.
Conventional perspective
Land –Inputs into production that are provided by nature such as raw materials from the surface of earth, mineral and oil deposits. The reward is rent. Labor – All forms of human input, both physical and mental, into current production. The reward is wage. Capital – All