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Introduction to business economics
Typology: Lecture notes
Uploaded on 09/14/2019
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Economy – “oikonomos” (Greek)
“One who manages a household”
Household - many decisions
Allocate scarce resources
Ability, effort, and desire
Society - many decisions
Allocate resources
Allocate output
Resources are scarce
Scarcity
The limited nature of society’s resources
Economics
Study of how society manages its scarce resources
Economists study:
How people make decisions
How people interact with one another
Analyze forces and trends that affect the economy as a whole
Trade off one goal against another
Student – time
Parents – income
Society
Society getting the most it can from its scarce resources
Size of the economic pie
Distributing economic prosperity uniformly among the members of society
How the pie is divided into individual slices
Make decisions
Whatever must be given up to obtain one item
Something that induces a person to act
Higher price
Public policy
Allows each person to specialize in the activities he or she does best
Enjoy a greater variety of goods and services at lower cost
Enforce rules and maintain institutions
Promote efficiency
Promote equality
How People Interact
Principle 8: A country’s standard of living depends on its ability to produce goods and services
Among countries
Over time
Principle 10: Society faces a short-run trade-off between inflation and unemployment
Chapter-2: Thinking Like an Economist
Diagrams & equations
Omit many details
Allow us to see what’s truly important
Built with assumptions
Simplify reality to improve our understanding of it
Firms – sellers
Households – buyers
Firms – buyers
Households – sellers
Factors of production
Production technology
