introduction to economics

Etymological definition of economics

Oikonomia

management of the

household

Oikonomia

often treated as one of the earliest

sources of economics that we

have information about

Xenophon

“Father of economics”

Adam Smith

“the study of nature and causes of

generating of wealth of a nation”

Adam Smith

economists: should be concerned

with how to produce and increase

the wealth

Adam Smith

“Father of Neoclassical

Economics”

Alfred Marshall

“a study of man in the ordinary

business of life. It enquires how he gets his

income and how he uses it. Thus, it is on the

one side, the study of wealth and on the

other and more important side, a part of the

study of man”.

Alfred Marshall

An Essay on the Nature and Significance of

Economics

Lionel Robbins

“the science which studies

human behavior as a relationship between

given ends and scarce means which have

alternative uses”.

Lionel Robbins

why does scarcity rise

due to the limited resources that can be used to satisfy the unlimited human needs and ants

The first American to win the Nobel Prize for

Economics

Paul Samuelson

“the study of how men and society choose, with or without the use of money, to employ scarce productive resources which could have alternative uses, to produce various commodities over time and distribute them for consumption now and in the future amongst various people and groups of society”.

Paul Samuelson

a social science that studies the optimum allocation, over time, of scarce human and non-human resources among their alternative uses in order to satisfy unlimited human wants and desires.

”

Bernardo Villegas

air, water, food, shelter, sleep, clothing, reproduction

physiological needs

personal security, employment, resources, health, property

safety needs

friendship, intimacy, family, sense of connection

love and belonging

respect, self-esteem, status, recognition, strength, freedom

esteem

desire to become the most that one can be

self-actualization

study of how society

chooses to use scarce productive

resources efficiently to produce

various commodities and distribute

them among different groups.

Economics

branches of economics

1. microeconomics

2. macroeconomics

concerned with the behavior of

individual entities like producers,

consumers, and markets.

MICROECONOMICS

Founder of Microeconomics:

Adam

Smith

concerned with the overall

performance of the economy.

MACROECONOMICS

Father of Macroeconomics:

John

Maynard Keynes

considers economic

conditions “as they are”

POSITIVE ANALYSIS

judges economic conditions

“as it should be”

NORMATIVE ANALYSIS

Economic Goals

Efficiency

Equity

Full employment

Economic growth

Stability

achieved when society is able to get the greatest amount of satisfaction

from available resources.

EFFICIENCY

kinds of efficiency

• technical

• allocative

• productive

resources are transformed into goods and services

without waste

Technical efficiency

the economy can produce goods and services that

satisfy the consumers’ needs and wants given its limited resources

Allocative efficiency

occurs when an economy cannot produce more of

one good without producing less of another good.

Productive efficiency

everyone who

wants work and is willing to work at the market wage is in work.

FULL EMPLOYMENT

indicator of full employment

unemployment rate

avoiding or limiting fluctuations in production, employment, and

prices

STABILITY

Indicator of stability

inflation rate

achieved by increasing the economy's ability to produce goods and services.

ECONOMIC GROWTH

economic growth is best measured by:

GDP: growth rate of production

achieved when income and wealth are fairly distributed within a

society

EQUITY

the value of the next best use for an

economic good or the value of the sacrificed alternative.

SCARCITY

an expression that describes the cost of decision-making and

consumption

"There ain

't no such thing as a free lunch" (TANSTAAFL), also known as

"there is no such thing as a free lunch" (TINSTAAFL)

a graph that shows the

combinations of two goods that can

be produced with a given resources

and level of technology.

PPF graph

Economic growth or an increase

in the total output level occurs

when one or both of the

following conditions occur.

1.Increase in the quantity

or/and quality of economic

resources.

2.Advances in technology.

When the PPF

shifts inwards, it indicates

that the economy is ___

shrinking