01 economics and its importance

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 ECONOMICS AND ITS

 IMPORTANCESummer 2016

10-May-2016

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 Economics is a social science concwith the efcient allocaand utilization o scarce

resources or the satiso he society’s unlimiteand needs.

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 Economists  • how people make decisions; how

work, what they purchase, how m

save out o their income and how

their savings

• how people interact with one ano

• analyze orces and trends that a

whole country

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 DIVISIONS

OF ECONOMICS

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 Micro- economics

branch o economics that ethe unctioning o the indivindustries and the behavio

individual decisionmakingi.e. business "rms and hou

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 Macro- economics

branch o economics thatexamines the economic bo aggregate economic v

i.e. income, output, emplinvestment, and general prices

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 BRANCHES

OF ECONOMICS

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 Positive Economics

• seeks to understand the

behavior and the opera

the economic system w

making #udgments abou

whether the outcomes a

or bad

• describes what exists a

it works $ypes%

1. Descriptive Economics is theand presentation o data that dphenomena and acts.

2. Economic Theory is a statem

or sets o related statements a

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 Normative Economics

• looks at the outcomes o ec

behavior and asks i they ar

bad, whether they can be m

better• involves #udgments and pre

or causes o action

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 METHODOLOGY

OF ECONOMICS

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 EconomicTheory

• attempts at "nding explanations

observed economic phenomena

establish cause and eect relatio

! why a person makes certain econ

decisions! why a particular outcome is reali

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 Economic Model

• ormal statement o an economic

which is usually a mathematical

o a presumed relationship betwe

more variables

• &ommonly expressed in words, ge'uations

! (aw o )emand and *upply

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 FOUNDATIONS

OF ECONOMICS

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UnlimitedWants

• the desire o consumers t

satisaction rom the vari

goods and services they

! necessities to luxuries• individuals and institution

enumerable un"lled want

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Scarce Resources

• +ll natural, human, and

manuactured resource

into production and serv

! actory, e'uipment, tomachinery, transportatcommunication, acilitiland, and mineral resou

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CATEGORIES of

 ECONOMIC RESOURCES

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 Land(arable land, forests,

mineral and oil deposits,water resources, etc.)

• -ncludes all natural reso

i.e., all gits o nature us

the production process

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 Labor(teachers, engineers,

 factory workers, physicians, professional athletes, etc.)

• eer to all the physical and

talents o individuals availab

usable in producing goods an

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Capital(tools, machinery, equipment, etc.)

• -ncludes all produced go

used again to produce

consumer goods and se

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Entrepreneur   • +n individual who comb

land, capital, and labor

produce goods or servic

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QUIZ

TOMORROW12May2016

--end of presentati