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Extra Lessons Part 1 Updated Scribbles 1
Extra Lessons Part 1 Updated Scribbles 1
Extra Lessons Part 1 Updated Scribbles 1
Schedule
• 8 Jul (Thur), 6-7.30pm (1h30)
• 9 Jul (Fri), 6-7.30pm (1h30)
• 10 Jul (Sat), 9.30-11am (1h30), 11.15am-12.30pm (1h15)
• 15 Jul (Thur), 6-7.30pm (1h30)
• 16 Jul, Fri, 6-7.30pm (1h30)
• 10 Jul (Sat), 9.30-11am (1h30), 11.15am-12.30pm (1h15)
• 22 Jul (Thur), 6-7.30pm (1h30)
• Progress Test next term starting August
Topics at a glance – Part 1
• 1. Why study economics? The economic problem
• 2. Scarcity, choice and the allocation of resources, the concept of demand
• 3. Positive and normative statements
• 4. Economic activities and economic agents, the concept of supply
• 5. Free and economic goods, consumer and capital goods, needs and wants
• 6. Factors of production
• 7. Production possibilities frontier
• 8. Inward and outward shifts of PPFs
• 9. Opportunity cost
1. Why study economics? The economic
problem
2. Scarcity, choice and the allocation of
resources, the concept of demand
• “If pensions are cut, more old people will die of hypothermia”
• What to produce?
• How to produce?
• Who is to benefit from the goods and services produced?
Four economic agents – at a glance
• Consumers
• Workers
• Firms
• Governments
• They don’t have enough income to purchase all the goods and services they
would like, so they have to allocate their resources – in particular, their
income – to maximise their welfare.
The purpose of economic activity
• Workers
• Economic theory states that workers want to maximise their own welfare at
work.
• This may mean they want as high a salary as they can get, although other
factors could be important too: the nature of the work; the location of the
job; job satisfaction; etc.
The purpose of economic activity
• Firms
• Economic theory states that the main objective of firms is to maximise their
profits.
• However, a firm may also have other objectives, e.g. survival, increasing
market share, environmental or ethical objectives.
The purpose of economic activity
• Governments
• This means their aim is to achieve rising living standards, increased disposable
income, etc.
The concept of supply
• Supply is defined as the quantity of goods and services that will be
sold at any given price over a period of time.
• Land
• Labour
• Capital
• Enterprise
Economy: manufactured vs
Non-manufactured goods?
Production possibilities frontier
• On this diagram, points A, B, C, D, F and
G represent possible combinations of
quantities produced of non-
manufactured and manufactured
goods.
A
• As his resources (e.g. land) are scarce, he S1
must give something up: he must reduce
the number of cows to C2.
C2 C1 Cows
S2 B
S1 A
C2 C1 Cows
9. Opportunity cost
• E.g. western countries such as the UK. Since the end of the 1970s, the
UK has moved strongly along the spectrum towards the pure market
economy model.
Economic systems – mixed economies