ECON1009

Introduction to Economics for

Management
 ECON1009
Introduction to Economics for
Management
Topic 1

Management Issue:
Understanding Economists

9 December 2021 ECON1009 2

 Organisation
• Dr Michael Williams michael.williams.j@gmail.com
• Teaching:
• 2 lectures per week. Weeks 18-26, 31-33:
– Tuesday 1200
– Friday 1400 (Class test Week 31)
• Classes start in Week 20 (teaching week 3) (w/b 14
February), and run from weeks 20-26, and 31

Class Test Tuesday 3 May in lecture slot at 1400

Class test 20%
Exam 80%
 SEMESTER 2 – 2010/11
Semester Weeks Uni Weeks
WEEK 1 Lectures start 18 Mon 31st January 2011 – Fri 4th February 2011

WEEK 2 19 Mon 7th February 2011 – Fri 11th February 2011

WEEK 3 Classes start 20 Mon 14th February 2011 – Fri 18th February 2011

WEEK 4 21 Mon 21st February 2011 – Fri 25th February 2011

WEEK 5 22 Mon 28th February 2011 – Fri 4th March 2011

WEEK 6 23 Mon 7th March 2011 – Fri 11th March 2011

WEEK 7 24 Mon 14th March 2011 – Fri 18th March 2011

WEEK 8 25 Mon 21st March 2011 – Fri 25th March 2011

WEEK 9 26 Mon 28th March 2011 – Fri 1st April 2011

EASTER Mon 4th April 2011 – Fri 8th April 2011

EASTER Mon 11th April 2011 – Fri 15th April 2011

No teaching
EASTER Mon 18th April 2011 – Fri 22nd April 2011

EASTER Mon 25th April 2011 –Mon 2nd May 2011

WEEK 10 Classes end; class test 31 Tues 3rd May 2011 – Fri 6th May 2011

WEEK 11 32 Mon 9th May 2011 – Fri 13th May 2011

No classes
WEEK 12 Lectures end 33 Mon 16th May 2011 – Fri 20th May 2011

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 Reading
• Course Text
Andrew Gillespie, Foundations of Economics,
OUP
• Other books are available in the library
include N. G. Mankiw, Principles of Economics.
• Another alternative or supplement is:
McGuigan/Moyer/Harris Economics for
Managers (www.cengagebrain.com for free stuff and
special offers. EUSOUTHAMPTON20 for discount)
 Aims
• To provide a foundation in the principles of
economic analysis for students of
management

Activities of firms
Operations of markets
Why might markets fail to operate efficiently?
 Course outline
Topic
1 Introduction: What is Economics?
2 Markets and resource allocation
3 Measuring demand responsiveness using elasticities
4 Consumers, Producers and market efficiency
5 Firms, production and costs
6 Profit maximisation
7 Perfectly competitive markets and firms
8 Monopoly
9 Capturing surplus: price discrimination and other techniques
10 Strategic competition in oligopolistic markets
11 Competition policy
12 Market failure
 What is Economics?
Chapters 1 & 2
• Resources are scarce
• Wants are unlimited

=>All societies must deal with three

questions:
What to produce?
How to produce?
For whom to produce?
 Key Words
Scarcity
Choice
Coordination
Market
[Planning]

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 Scarcity
NOT Universal abundance => no fundamental
choices since no constraints

Ultimately it is resources ('land', labour and capital)

that are scarce

Scarcity is relative: can be eased by reducing

demands or by increasing supply

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 Economic Choices

Concerned with
What
How
For whom
Goods & services are produced and delivered

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 Decision-making
• Government
• Interactions between individual decision-
makers

• Command economies
• Market economies
• Mixed economies
Concretely, people, as economic agents, choose
 Co-ordination

Social mechanism needed to co-ordinate

individuals' decisions about
What to consume
What & how to contribute to production
Some combination of markets and planning -
a mixed economy

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 Market Co-ordination
(the 'Invisible Hand')
What?
Can command a price sufficient to cover
Costs of production
Including profit
How?
By cost-minimising technique of producing
The amount that can be sold
At the price which it can command
For whom?
Those able & willing to pay at least a price
That covers costs of production
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 Modelling Scarcity

The Production Possibility Frontier

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 Opportunity cost
… of any activity is the value of the lost opportunity to
pursue the most attractive alternative given the same
time & resources
e.g.: what is ‘real’ cost of:
– spending £1 million on the NHS?
– an individual working in their own firm?

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 Production Possibility Curve

... shows max output of 2 commodities for given

resources & technology.
Check
cost of moving from b to d?
productive inefficiency?
increased resource endowment?
improved technology?
Note the concave shape of the function …
illustrating increasing opportunity cost

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 Production
Possibility
Curve
Resource constraint on
economy or firm
Inside: resources
Wasted
Idle
Down-sloping
Opportunity trade-off
Concave
Diminishing
returns/increasing
opportunity costs

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 Costs and Efficiency

Efficient competitive markets:

take account of opportunity
costs

at the margin
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 Question 1
GM production and other modern agricultural
techniques can increase crop output to such a
extent that essentially the economic problem
for most countries disappears.
Do you agree?

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 Question 2
Distinguish between the ‘invisible hand’ and
‘visible hand’ methods of allocating resources
in a mixed economy.

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