chapter 1 nature of economics1 content part i what is economics? part ii consumption, production...
TRANSCRIPT
Chapter 1 Nature of Economics 1
Content
Part I What is economics?
Part II Consumption, Production & Exchange
Part III Market structure
Part IV Factor market
Part V Market Coordination & Efficiency
Chapter 1 Nature of Economics 2
Part I What is economics?
Chapter 1 Nature of Economics
Chapter 2 Scarcity & Competition
Chapter 3 Supply, Demand & Price
Chapter 4 Methodology of Economics
Chapter 1 Nature of Economics 3
Learning Objectives
What is Economics? Micro vs. Macro Economics Policy
Chapter 1 Nature of Economics 4
Learning Objectives
What is Economics? Micro vs. Macro Economics Policy
PRODUCTION CONSUMPTION COORDINATION
Production of goods and services
Consumption of goods and services
Coordination of production and consumption
Question
What are economic issues?
Social Issues
Unemployment Inflation International Trade Falling/Rising of Prices
of Residential Flats Education Pollution Crime rate Public Health Single Parent Families
Economic Issues?
Yes!
Chapter 1 Nature of Economics 9
What is Economics?
Economics is a social science that attempts to explain and predict human behaviour within a market.
Question
What are the differences between natural science and social science?
Chapter 1 Nature of Economics 11
What is Economics?
Natural Sciences are disciplines that deal with the objects, phenomena or the laws of nature and the physical world.
Examples:
biology, chemistry,and physics.
Chapter 1 Nature of Economics 12
What is Economics?
Social sciences are scholarly or scientific disciplines that deal with the study of society and individual relationships, within it.
Examples:
sociology, psychology, anthropology, economics, political science and history.
Question
What is the major characteristics of a ‘science’ subject?
Chapter 1 Nature of Economics 14
What is Economics?
Science use scientific models and theories to make predictions and explaining phenomena.
Chapter 1 Nature of Economics 15
What is Economics?
There are 2 major problems faced by social scientists or economists:
1. It is difficult or impossible to conduct a controlled experiment.
2. Human behaviour can be distorted by human will.
Chapter 1 Nature of Economics 16
Learning Objectives
What is Economics? Micro vs. Macro Economics Policy
Chapter 1 Nature of Economics 17
Micro vs. Macro
Economics is traditionally divided into two main branches:
– Microeconomics– Macroeconomics
Microeconomics
Macroeconomics
Chapter 1 Nature of Economics 19
Micro vs. Macro
Microeconomics is concerned with individual decisions, and the units of investigation are individuals in the economy.
Macroeconomics is concerned with the economy as a whole. It is the study of economic aggregates such as unemployment, inflation, growth and the balance of payments.
Chapter 1 Nature of Economics 20
Learning Objectives
What is Economics? Micro vs. Macro Economics Policy
Social Issues
Unemployment Inflation International Trade Falling/Rising of Prices
of Residential Flats Education Pollution Crime rate Public Health Single Parent Families
Economic Issues?
Yes!
Example
Should the government increase the places of university?
Do we have enough money to finance the additional university places during recession?
Shall we raise the school fee?
Chapter 1 Nature of Economics 23
Economics Policy
To answer those questions, we have to differentiate 2 different types of issues:
– Normative issue– Positive issue
Chapter 1 Nature of Economics 24
Economics Policy
Normative statement is a statement of value.
It is a statement about what ought to be or ought not to be, about whether something is good or bad, desirable or undesirable.
Examples:you should keep quiet in the classroom, you are pretty.
Chapter 1 Nature of Economics 25
Economics Policy
Positive statement is a statement of fact.
It can be right or wrong, and its validity can be verified by appealing to facts.
Examples: this is a blackboard, you get 80 marks in your examination
The oil prices should be lower.
The price will rise if the supply decreases.
The unemployment rate will increase if the government raises the tax rate.
The government should reduce the unemployment rate.
PositiveNormativeIssue
The oil prices should be lower.
The price will rise if the supply decreases.
The unemployment rate will increase if the government raises the tax rate.
The government should reduce the unemployment rate.
PositiveNormativeIssue