JD

Lecture_01_Introduction+to+Economics_v1

Acknowledgement of Traditional Owners

  • QUT acknowledges the Turrbal and Yugara as the First Nations owners of the lands where QUT is situated.

  • Respect is paid to their Elders, lores, customs, and creation spirits.

  • Recognition of the historical significance of these lands as places of teaching, research, and learning.

  • Emphasis on the role of Aboriginal and Torres Strait Islander people within the QUT community.

Lecture Overview

Lecture 1

  • Introduction to Economics

  • Learning the economic way of thinking.

Traffic Congestion as an Economic Problem

  • Suggested solutions for traffic congestion include:

    • Taxing road users via tollbooth

    • Adding more lanes

    • Increasing petrol prices

    • Improving public transport

    • Introducing carpooling

    • Lowering the price of public transport.

  • Engagement platform: app.gosoapbox.com (Event Code: 218-199-383).

Objectives of the Lecture

  • Understand the definition of economics.

  • Learn the economic way of thinking.

  • Align economic analysis with the UN Sustainable Development Goals.

Outline of Lecture

  • What is Economics?

  • Scarcity: The Economic Problem.

  • The Economic Way of Thinking.

  • Economics as a Social Science.

Understanding Economics

What is Economics?

  • Origin of the term:

    • "Eco" (home) + "nomos" (accounts).

  • Economics is a social science concerned with choices made by individuals, businesses, governments, and societies in relation to scarcity.

Scarcity: The Economic Problem

  • Defined as the condition where wants exceed the ability of resources to satisfy them.

  • Scarcity forces choices among available alternatives.

    • Example: Choosing between attending a lecture or watching a movie.

    • Firms must decide between producing various goods (e.g., toilet paper vs. face masks).

Fundamental Economic Questions

  1. What to Produce?

    • Decisions on what goods/services to offer based on available resources.

  2. How to Produce?

    • Choice of production techniques and factors of production involved.

  3. For Whom to Produce?

    • Determining who receives goods/services, influenced by income distribution.

Factors of Production

Categories

  • Land: Natural resources used in production.

  • Labour: Human effort used in production.

  • Capital: Tools and equipment used in production.

  • Entrepreneurship: The organization of resources to produce goods/services.

Scarcity Examples

  • Example of hilsa fish scarcity impacting India, Bangladesh, and Myanmar relations.

  • Current solutions:

    • Fishing bans during breeding periods.

    • Creation of fishing sanctuaries.

Opportunity Cost

  • Illustrated through cartoons, showing the concept of opportunity cost in decision-making.

Economic Way of Thinking

  • Understanding the concept of choice as a tradeoff;

  • Rational choice is informed by cost-benefit analysis:

    • Benefit: What is gained.

    • Cost: What is given up.

Key Ideas of Economic Thinking

  • Rational decision making involves considering marginal costs and marginal benefits.

  • Choices respond to incentives, influencing individual and firm decisions.

Application of Marginal Thinking

  • Example of a farmer's decision on fertilising farmland as a cost-benefit consideration.

Economic Models

  • Definition: Economic models describe variables and relationships in the economy, focusing on necessary features for explanations.

  • Ceteris Paribus: Understanding how a change in one variable affects outcomes while other conditions remain constant.

Cause and Effect

  • Caution against assuming causality in observed events; relationships may not always indicate direct cause.

Economics as a Social Science

  • Economists aim to understand the mechanisms of the economic world.

  • Distinction between positive and normative statements:

    • Positive: What is (e.g., environmental concerns related to coal).

    • Normative: What ought to be (e.g., recommendations for reducing coal usage).

Two Branches of Economics

  • Microeconomics: Focuses on individual and business choices and their interactions with government policies.

  • Macroeconomics: Studies aggregate effects on national and global economies based on individual and business decisions.

Outline of Lectures 2 – 12

  1. Microeconomics

    • Demand & Supply

    • Elasticities

    • Market Efficiency and Government Intervention

    • Production and Cost

    • Perfect Competition and Monopoly

    • Monopolistic Competition and Oligopoly

  2. Macroeconomics

    • GDP and Economic Growth

    • Unemployment and Inflation

    • Aggregate Demand/Supply and Expenditures

    • Fiscal and Monetary Policy

    • International Trade Policy

Review of Today’s Lecture

  • Key points covered include:

    • Definition of Economics

    • Understanding Scarcity and its implications

    • The Economic Way of Thinking

    • Economics as a Social Science.