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Nature and Scope of Economics

By Linnliyana Jul 23, 2013 401 Words
HND Business Management
Business Economics

NATURE & SCOPE OF
ECONOMICS



What is Economics?
Issue in economics  Macroeconomics  Microeconomics


Lecture 1 (c) Copyright MFA 11

Nature and Scope of Economics  All About Economics


Want and Desires  Scarcity  Economic Problems  Opportunity Cost 



Production Possibility Curve(PPC)


Shift of The PPC.

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9/21/2011

Lecture 1 (c) Copyright MFA 11

WHAT IS ECONOMICS?

3

Issues in Economics
Demand
Competitiveness

Microeconomics
Supply

Macroeconomics
Economic Growth & Development
Unemployment

Inflation
Money Supply

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MICROECONOMICS

Microeconomics:

deals with the economic problems of the individual, the firm, and the industry

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MACROECONOMICS

Macroeconomics:

deals with the aggregates of economics - total production, total employment, and general price level

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NATURE AND SCOPE OF ECONOMICS


Economics is important to the
(a) Individual (b) Businessman (c) Government

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 Economics

deals with how scarce resources are allocated to maximize the unlimited wants that we want to fulfill.

9/21/2011

Lecture 1 (c) Copyright MFA 11

SUPPLY

RESOURCES
e.g. Time, Land, People

DEMAND
WANTS

e.g. Designer Jeans, MP3 Players, Motorbike, Banking 8 services

WHAT IS ECONOMICS ALL ABOUT?


Wants and desires:







Humans wants are unlimited. Some wants are more important than others. Some wants are more easily satisfied than others. Wants are for both present and future consumption.



Our wants are unlimited but we have the problem of scarcity in: 
  

Natural resources Time and energy Monetary problems or financial constraints Factors of production i.e. Material, Labour, Capital and Enterprise.

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As our wants are unlimited and innumerable while our resources for satisfying them are limited and scarce, not all our wants can be satisfied. Hence, a choice has to be made.



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BASIC ECONOMIC PROBLEMS


Five basic economic problems faced by all countries are:








What to produce? How to produce and how much to produce? For whom to produce? When to produce? Where to produce?

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WHAT IS ECONOMICS ALL ABOUT?


Opportunity cost can be defined as the next best alternative forgone, i.e. something which must be sacrificed in order to obtain something else. Examples of opportunity costs for the individual:
  



Between work or leisure Present consumption or savings Revision or playing games.



Examples of opportunity cost for the producer:
 

Labour or Capital Site A or B.

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Examples of opportunity cost for the government:
 

Military goods or civilian goods Guns or butter.

13

Q& A THANK YOU

14

9/21/2011

Lecture 1 (c) Copyright MFA 11

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