المتابعون

الجمعة، 1 يونيو، 2012

SEMESTER 2 PASSAGE (1)


Economics is the study of how individuals and societies choose to use the scarce resources that nature and previous generations have provided.
Why Study Economics?
         An important reason for studying economics is to learn a way of thinking.
         Three fundamental concepts:
         Opportunity cost
         Marginalism, and
         Efficient markets
         Opportunity cost is the best alternative that we forgo, or give up, when we make a choice or a decision.
         Nearly all decisions involve trade-offs.
         In weighing the costs and benefits of a decision, it is important to weigh only the costs and benefits that arise from the decision.
         For example, when a firm decides whether to produce additional output, it considers only the additional (or marginal cost), not the sunk cost.
         Sunk costs are costs that cannot be avoided, regardless of what is done in the future, because they have already been incurred.
          
         An efficient market is one in which profit opportunities are eliminated almost instantaneously.
         There is no free lunch!  Profit opportunities are rare because, at any one time, there are many people searching for them.
         The study of economics is an essential part of the study of society.
         Economic decisions often have enormous consequences.
         During the Industrial Revolution, new manufacturing technologies and improved transportation gave rise to the modern factory system.
         An understanding of economics is essential to an understanding of global affairs.
         Voting decisions also require a basic understanding of economics
         Microeconomics is the branch of economics that examines the behavior of individual decision-making units—that is, business firms and households.
         Macroeconomics is the branch of economics that examines the behavior of economic aggregates— income, output, employment, and so on—on a national scale.
         Positive economics studies economic behavior without making judgments.  It describes what exists and how it works.
         Normative economics, also called policy economics, analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe courses of action.
         Normative economics, also called policy economics, analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe courses of action.
         Normative economics, also called policy economics, analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe courses of action.

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