Introduction to Economics

(scarce resources)

G What! G ( G G G )G How G G ()G For whom G

(Who) (market mechanism) (government intervention) safety net ( who debatable )

Economy is Us.

56,000 56,000 (national income) xxx xxx

( () ()

.. ., ..

Scarcity: The core problem

20,000 (fact) (good & services) factors of production (/)

- Land : - Labor : "()" skill - Capital : final goods produced for use in production of other goods.() , - Entrepreneurship : A B A B Entrepreneurship Entrepreneur Entrepreneurship ( Entrepreneurship )** Entrepreneurship debate (free market) () ...

Opportunity cost :

Every time we use scarce resources in one way, we give up the opportunity to use them in other ways.

( land, labor, capital, Entrepreneurship),

.. ., ..

Production possibilities

(truck) (tank)

10 1 5 8 4 2 1

x , y production possibilities curve ( 10 )

simplified

.. ., ..

* 1 2 ( B) 1 1 ( C) ** opportunity cost 0.5 ?

( ) opportunity cost law of increasing opportunity cost.

Efficiency & Inefficiency

production possibilities curve 4 2 , however! production possibilities curve (efficiency)

efficiency /

production possibilities curve (potential) PPC inefficiency

Y ( Y ( B) ( C)

.. ., ..

Y ( PPC) (privatize) ( ) . - ..(. .),

X X

production possibilities curve () (, ) () PPC shift

PP2 ** PP2 Economic Growth(), GDP ()

.. ., ..

Basic Decision

"" 5 5 10 3

G What! ! G How G G G G G G G G () G G G G For whom G G G G

The Mechanism of Choice

?

The invisible hand of a market economy

Adam Smith The Wealth of Nations invisible hand

(- ) "" ( ) ( )

production possibility curve,

": market mechanism" ()

.. ., ..

"Indeed , the essential feature of the market mechanism is the price signal. "

() () ->

() ""

"" () ()

3 (what, who, for whom) "leave it alone"(laissez faire)

laissez faire () Karl Marx ()(, ) () (surplus) "" ()

John Maynard Keynes () (, )( )

.. ., ..

(GDP growth) GDP ( )

* cheap labour economy

(full employment)

* (play an active role) (not all-inclusive role)

(, , ) (, , )

- conservative()(): (liberalism, neoliberalism) (, )

- liberal()() (socialism) liberal efficiency equity

*** conservative, liberal (/) ( ) , cons / ** conservative republican , liberal democrat

.. ., ..

norm value ( mixed economies , )

?

(How economies function) ()

(objectives) "" (goals) / 1978 ""

Macro vs. Micro

2 Macroeconomics() Microeconomics()

"the big picture" ( PPC - )

.. ., ..

Theory vs. Reality

( ) "ceteris parinus: other thing remaining equal" ceteris parinus

ceteris parinus

1

.. ., ..