Download Economics

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
1
Part I What is economics?
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Nature of Economics
Scarcity & Competition
Supply, Demand & Price
Methodology of Economics
Chapter 1 Nature of Economics
2
Learning Objectives
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What is Economics?
Micro vs. Macro
Economics Policy
Chapter 1 Nature of Economics
3
Learning Objectives
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What is Economics?
Micro vs. Macro
Economics Policy
Chapter 1 Nature of Economics
4
PRODUCTION
CONSUMPTION
Production of
goods and
services
Consumption of
goods and
services
COORDINATION
Coordination of
production and
consumption
Question
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What are economic issues?
Social Issues
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Unemployment
Inflation
International Trade
Falling/Rising of Prices
of Residential Flats
Education
Pollution
Crime rate
Public Health
Single Parent Families
Economic Issues?
Yes!
What is Economics?

Economics is a social science that
attempts to explain and predict human
behaviour within a market.
Chapter 1 Nature of Economics
9
Question
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What are the differences between
natural science and social science?
What is Economics?
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Natural Sciences are disciplines that
deal with the objects, phenomena or
the laws of nature and the physical
world.
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Examples:
biology, chemistry,and physics.
Chapter 1 Nature of Economics
11
What is Economics?
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Social sciences are scholarly or scientific
disciplines that deal with the study of
society and individual relationships, within it.
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Examples:
sociology, psychology, anthropology,
economics, political science and history.
Chapter 1 Nature of Economics
12
Question
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What is the major characteristics of a
‘science’ subject?
What is Economics?
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Science use scientific models and
theories to make predictions and
explaining phenomena.
Chapter 1 Nature of Economics
14
What is Economics?
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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
15
Learning Objectives
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What is Economics?
Micro vs. Macro
Economics Policy
Chapter 1 Nature of Economics
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Micro vs. Macro
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Economics is traditionally divided into
two main branches:
– Microeconomics
– Macroeconomics
Chapter 1 Nature of Economics
17
Macroeconomics
Microeconomics
Micro vs. Macro
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Microeconomics is concerned with
individual decisions, and the units of
investigation are individuals in the economy.
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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
19
Learning Objectives

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
What is Economics?
Micro vs. Macro
Economics Policy
Chapter 1 Nature of Economics
20
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
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Should the government increase the
places of university?
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Do we have enough money to
finance the additional university
places during recession?
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Shall we raise the school fee?
Economics Policy
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To answer those questions, we have
to differentiate 2 different types of
issues:
– Normative issue
– Positive issue
Chapter 1 Nature of Economics
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Economics Policy
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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
24
Economics Policy
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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
Chapter 1 Nature of Economics
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Issue
The government should
reduce the unemployment
rate.
The unemployment rate will
increase if the government
raises the tax rate.
The price will rise if the
supply decreases.
The oil prices should be
lower.
Normative
Positive
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Issue
The government should
reduce the unemployment
rate.
The unemployment rate will
increase if the government
raises the tax rate.
The price will rise if the
supply decreases.
The oil prices should be
lower.
Normative
Positive
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