Microeconomics Session 2

8/8/2019 Microeconomics Session 2

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MICROECONOMICS

Session 2


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1. Set you cell phones on silent mode.2. We will start on time (5:30 p.m.) and end on time

(7:30 p.m.).

3. When speaking, talk to the farthest person in the

room. When somebody elseis speaking, listen.


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Upon completion of the course, the students will be able to:

1. Understand the different market structures of firms and how

these affect the welfare of consumers.2. Relate theories and concepts to practical situations happening

in the field of business;

3. Acquire basic principles in determining cost and profit.

4. Develop a high sense of social responsibility in business

towards the improvement of the countrys economy in general.


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Midterm Grade

` 15% Attendance and class participation. Every timeyou are late (arrival in class after 5:45pm), a point willbe deducted against this total.

` 20% -Quizzes

` 15% - Project

` 50% - Midterm Exam

` 100% - Total


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Final Term Grade` 15% Attendance and class participation. Every time

you are late (arrival in class after 5:45pm), a point willbe deducted against this total.

` 20% -Quizzes

` 15% - Project

` 50% - Final Exam

` 100% - Total

Final Grade MT Grade (50%)+ FT Grade (50%)=100%


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` Introduction to the course

` Lecture

` Discussion` Recitation

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` Economics is the social science that analyzes the

production, distribution, and consumption ofgoods

and services.

` The term economics comes from the Ancient Greek (oikonomia, "management of a

household, administration") from (oikos,

"house") + (nomos, "custom" or "law"), hence

"rules of the house(hold)".` Economics is the study of how we individually and

collectively make our choices.


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` Production refers to the economic process ofconverting of inputs into outputs. Production usesresources to create a good or service that is suitablefor exchange. This can include manufacturing, storing,

shipping, and packaging. Some economists defineproduction broadly as all economic activity other thanconsumption. They see every commercial activity otherthan the final purchase as some form of production.

` Production is a process, and as such it occurs throughtime and space. Because it is a flow concept,production is measured as a rate of output per periodof time.


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There are three aspects to production processes:

` the quantity of the good or service produced,

` the form of the good or service created,

` the temporal and spatial distribution of the good orservice produced.

` A production process can be defined as any activity

that increases the similarity between the pattern of

demand for goods and services, and the quantity,form, shape, size, length and distribution of these

goods and services available to the market place

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` Distribution in economics refers to the way total

output or income is distributed among individuals

or among the factors of production (such as labour,

land, and capital).


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` Consumption is a common concept in economics,

and gives rise to derived concepts such as

consumer debt. Generally, consumption is defined

in part by opposition to production. Othereconomists define consumption much more

broadly, as the aggregate of all economic activity

that does not entail the design, production and

marketing of goods and services (e.g. "theselection, adoption, use, disposal and recycling of

goods and services")


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Activity

Since grade school, we have been taught thatthere are several basic human needs. Can you

recall two other basic needs, aside from food,

that human beings need to survive?


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Macroeconomics examines the economy as a

whole the national income and output, the

unemployment rate, and price inflation .

Macroeconomic analysis also considers factors

affecting the long-term level and growth of national

income. Such factors include capital accumulation,

technological change and labor force growth


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` Microeconomics (from Greek prefix micro-

meaning "small" + "economics")

` a branch of economics that studies how theindividual parts of the economy, the household

and the firms, make decisions to allocate limited

resources,typically in markets where goods or

services are being bought and sold.


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` Microeconomics examines how these decisions

and behaviors affect the supply and demand for

goods and services, which determines prices, and

how prices, in turn, determine the supply anddemand of goods and services


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` This is a contrast to macroeconomics, which

involves the "sum total of economic activity, dealing

with the issues of growth, inflation, and

unemployment. Microeconomics also deals withthe effects of national economic policies (such as

changing taxation levels) on the before mentioned

aspects of the economy.


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` A market is any one of a variety of different systems,institutions, procedures, social relations andinfrastructures whereby persons trade, and goods andservices are exchanged, forming part of the economy.

` It is an arrangement that allows buyers and sellers toexchange items. Competition is essential in markets, andseparates market from trade. Two persons may trade, butit takes at least three persons to have a market, so thatthere is competition on at least one of its two sides.

` Markets vary in size, range, geographic scale, location,types and variety of human communities, as well as thetypes of goods and services traded.

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` is the desire to own anything and the ability to pay for

it and willingness to. The term demand signifies the

ability or the willingness to buy a particular

commodity at a given point of time.` Is simply a statement of a buyers plans, or

intentions, with the respect to the purchase of a

product

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` A fundamental characteristics of demand is this:

` All else equal , as price falls the quantity demanded

rises, and as price rises, the quantity demanded

falls.` There is a negative or inverse relationship between

price and quantity demanded.

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` Tastes ( new product)

` Number of buyers

` Income

` Substitutes

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` supply is the amount of some product producers are

willing and able to sell at a given price all other

factors being held constant. Usually, supply is plotted

as a supply curve showing the relationship of price tothe amount of product businesses are willing to sell.

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` A microeconomic law stating that, all other factors

being equal, as the price of a good or service

increases, the quantity of goods or services offered

by suppliers increases and vice versa..

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` Take care of your Thoughts because they become Words.

` Take care of your Words because they will become Actions.

` Take care of your Actions because they will become Habits.

` Take care of your Habits because they will form your

Character.

` Take care of your Character because it will form your

Destiny,

and your Destiny will be your Life.

The Dalai Lama


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What are the factors affecting

supplies?

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Documents

Microeconomics Session 2