Economics Issues

INTRODUCTION : ECONOMICS ISSUES

 

DEFINITION OF ECONOMICS

Field of social science that studies the behaviour of individuals and society in the distribution and allocation of limited factors of production

 DIFFERENCES BETWEEN MICROECONOMICS & MACROECONOMICS

 

MICROECONOMICS	MACROECONOMICS
Study of small economic units	About the whole of economy issue in the country
Demand and supply in individual markets	Monetry/fiscal policy
Individual consumer behaviour	Reasons for inflation and unemployment
Individual labour markets-Demand for labour and wages	Economic growth and government borrowing

 POSITIVE VERSUS NORMATIVE ECONOMICS STATEMENT

POSITIVE ECONOMY STATEMENT	NORMATIVE ECONOMY STATEMENT
Based on facts and not value judgement.It also can be tested and verified.	Based on value judgement and on personal opinion.It cannot be tested.
Example;Government provided healthcare increases public expenditure.	Example;Government should provide basic healthcare to all citizens.

BASIC ECONOMICS CONCEPTS
SCARCITY	Lack of resources to produce unlimited demand
CHOICE	Decision that must be make by the firm to produce all product at the same time
OPPORTUNITY COST	Second class thing which is the second class thing will be forgone to get the best alternative

EXAMPLES DUE TO THE BASIC ECONOMIC CONCEPTS

Aza has RM5 and she would like to buy 2 things : a book and a pen which cost RM5 each (unlimited wants and limited sources).Aza has to choose either to purchase a book or a pen which would satisfy her needs(choices).If Aza chooses the book,then the pen is the opportunity cost because it is the second best alternative which she has to forgone.

BASIC ECONOMICS PROBLEMS
WHAT to produces	-Concerned with goods and services will be produces. -Firms will produces goods based on demand of the goods and the goods must give maximum utility.
HOW much to produces	-Decide how many quantity of the product should be produces. -Must based on total demand for the goods.
HOW to produces	-How the goods will be produced for the firm to make the decision.
For WHOM to produces	-The target market to sell the product. -Goods are distributing base on income of people.