Preliminary Economics Half-Yearly Notes
Economics Half-Yearly Notes
PRELIMINARY TOPIC ONE: INTRODUCTION TO ECONOMICS
The Nature of Economics * Economic problem: wants, resources, scarcity
Relatively unlimited wants
Relatively limited resources
Scarcity → need for choice
Economic systems: * traditional * command * market * mixed
Three basic economic problems: WHAT/ HOW MUCH g + s should be produced? HOW should the g + s be produced? FOR WHOM should g + s be produced?
* Economic problem: how a society can satisfy the unlimited wants (of individuals or the community) with the limited resources available.
Summary: * Our wants are unlimited * Resources are scarce – that is, the resources we have to satisfy our wants are limited * Since we cannot satisfy all our wants with our limited resources, we must choose between them * Therefore, we need to rank our preferences – we will choose our highest preference wants first, and leave some wants unsatisfied.
* The need for choice by individuals and society
Wants: the material desires of individuals or communities which provide pleasure or satisfaction when consumed.
Needs: the basic human necessities for life.
Utility: the level of satisfaction or pleasure obtained from consumption.
Individual wants: the desires of each individual, based on amount of income and personal preferences (environment).
Collective wants: the wants of a whole community, which are provided by the government.
Unlimited wants: the concept that we have endless wants, and must choose between them, due to limited income.
Recurrent wants: wants that need to be met over and over again.
Complementary wants: wants which need to be consumed with the purchase of another want.
* Wants change over time. Factors that affect these changes include: age, income [based on employment status and relationship (eg. marital status)], technology, fashion and lifestyle [environment].
* Opportunity cost and its application
PRELIMINARY TOPIC ONE: INTRODUCTION TO ECONOMICS
The Nature of Economics * Economic problem: wants, resources, scarcity
Relatively unlimited wants
Relatively limited resources
Scarcity → need for choice
Economic systems: * traditional * command * market * mixed
Three basic economic problems: WHAT/ HOW MUCH g + s should be produced? HOW should the g + s be produced? FOR WHOM should g + s be produced?
* Economic problem: how a society can satisfy the unlimited wants (of individuals or the community) with the limited resources available.
Summary: * Our wants are unlimited * Resources are scarce – that is, the resources we have to satisfy our wants are limited * Since we cannot satisfy all our wants with our limited resources, we must choose between them * Therefore, we need to rank our preferences – we will choose our highest preference wants first, and leave some wants unsatisfied.
* The need for choice by individuals and society
Wants: the material desires of individuals or communities which provide pleasure or satisfaction when consumed.
Needs: the basic human necessities for life.
Utility: the level of satisfaction or pleasure obtained from consumption.
Individual wants: the desires of each individual, based on amount of income and personal preferences (environment).
Collective wants: the wants of a whole community, which are provided by the government.
Unlimited wants: the concept that we have endless wants, and must choose between them, due to limited income.
Recurrent wants: wants that need to be met over and over again.
Complementary wants: wants which need to be consumed with the purchase of another want.
* Wants change over time. Factors that affect these changes include: age, income [based on employment status and relationship (eg. marital status)], technology, fashion and lifestyle [environment].
* Opportunity cost and its application