Chap1 Principles Of Economics

Topics: Economics, Capitalism, Planned economy Pages: 64 (2815 words) Published: March 15, 2015
UBEA 1013 ECONOMICS
Ms. Siti Rohaya Mat Rahim
Consultation Hours:
Monday : 10 am - 12 pm
Thursday: 2 pm - 4pm
Room : H203
Email: rohaya@utar.edu.my
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Christopher Sims, Nobel Laureate in Economics, 2011.


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Economics, at its best, is a set of ideas and
methods for the improvement of society. It is
not, as so often seems the case today, a set of
ideological rules for asserting why we cannot
face the challenges of stagnation, job loss and
widening inequality.

CHAPTER 1:
ECONOMICS

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CHAPTER OUTLINE
1.1 Why Study Economics?
1.2 Economics Defined
1.3 The Scope of Economics
1.4 Scarcity, Choices & Opportunity cost
1.5 Basic Economic Problems
1.6 Production Possibility Frontier (PPF)
1.6 Economic System

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1.1 WHY STUDY ECONOMICS?
 To

learn a way of thinking
 To understand the society
 To understand global
affairs
 To be an informed voter

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1.2 ECONOMIC DEFINED
a) K.E. Case and R. C. Fair view that economics is a
study of how people use their limited resources to try
to fulfill unlimited wants and involves alternatives or
choices.
b) David N. Hyman defined economics as a study of how
scarce resources are allocated among alternative uses
c) Economics is a science that studies human behavior
as a relationship between ends and scarce, which have
alternative uses, according to L. Robbins

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1.3 THE SCOPE OF ECONOMICS




Microeconomics deals with individual units;
a household, a firm and an industry. Studies
the interrelationship between these units to
determine the pattern of distribution of goods
and services.
Macroeconomics looks at the economy as a
whole. Its deal with the economic behavior of
aggregates; national output, overall price
level, inflation, unemployment.

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Branch of Economics
urban

and regional economics

econometrics
finance
comparative

economic systems
economic development
labor economics
international economics
public economics
economic history
law and economics

the

history of economic thought
neuroeconomics
agricultural economics
environmental and natural resource economics
fisheries economics
welfare economics
behavioral economics
mathematical economics
health economics
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etc

QUESTION
Should economics be considered a
science?

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Careers related to economics
Accountancy
Banking
Insurance
Business

Intelligence
research
Social research
Journalism
Public sector
Management consultancy
Human Resource Management
Market

Economic

Adviser
Manager
Stock Broker with insurance company
Research Analyst
Research Assistant
Actuarial Analyst
Finance Analyst
Financial

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Types of Work Entered
Business & finance professionals or
associate professionals

43%

Commercial, industrial, public sector
managers

15%

Administrative, clerical, secretarial
positions

15%
5%

Media, sales, advertising, PR etc
Others, inc. teaching, IT, health,
retail, uniformed services, etc.

22%

Figures from HESA (www.prospects.ac.uk/links/wdgd) 

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1.4 SCARCITY, CHOICES AND
OPPORTUNITY COST
Scarcity:
The core problem

Choice

Opportunity
cost
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Danny has RM5 and he would like
to buy two things; a book and a pen
which cost RM5 each (unlimited
wants and limited resources).
Danny has to choose either to
purchase book or a pen which
would satisfy his needs (choices). If
Danny choose the book, then the
pen is the opportunity cost.

Scarcity





Human wants are always greater than the
available resources.
Society has limited (scarce) resources (factors
of production), and therefore cannot produce
all the goods and services people wish to
have.
Economist has classified the factors of
production into four groups namely Labour,
Capital, Land and Entrepreneur.

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Choice





Faced with scarcity, people must make
choices – cannot get all....
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