L1 Introduction

Page 1: Introduction to Principles of Microeconomics

• Dr. Tien-Der Jerry Han presents the course content.

Page 8: Contemporary Economists' Focus

• Definition of Economics: The study of how society manages resources, including:

  • Natural (e.g., oil, trees, land, water, time).

  • Human (labour).

  • Capital (machines, factories).

• Central Economic Problem: Scarcity of resources leads to making choices that involve trade-offs, responding to incentives.

• Scarcity Concept: Resources are limited compared to infinite human wants.

  • Example of managing chores among flatmates.

Page 9: Understanding Microeconomics

• Division of Economics:

  • Microeconomics (focus on individual markets).

  • Macroeconomics (focus on overall economy).

• Key Questions in Microeconomics:

  • What to produce?

  • How to produce?

  • For whom to produce?

• Objectives: Efficiency (primary focus) vs. Equity (fairness).

  • Efficiency seeks to maximize resources before redistribution.

Page 10: Economic Systems Spectrum

• Choice and Economic Systems: All societies must make choices regarding resource management.

• Types of Economic Systems:

  • Centrally Planned Economy: All decisions made by the government.

  • Free Market Economy: No government intervention in decisions.

• Market Benefits: Markets generally outperform alternatives due to better information, flexibility, and decentralization of power.

  • Acknowledgment of market imperfections.