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    Micro Economics....

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    Biswajit Maity
    This document provides an overview and outline of topics to be covered in a microeconomics lecture. It discusses key microeconomic concepts like scarcity, factors of production, and the production possibilities frontier. Specifically, it defines scarcity, lists the five factors of production, explains how the production possibilities frontier model illustrates scarcity and opportunity costs, and outlines how the frontier can shift from technological improvements or increased resources. It also provides examples of how microeconomic concepts are relevant to business and policy decisions.

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    Micro Economics....

    Uploaded by

    Biswajit Maity
    174 views25 pages
    This document provides an overview and outline of topics to be covered in a microeconomics lecture. It discusses key microeconomic concepts like scarcity, factors of production, and the production possibilities frontier. Specifically, it defines scarcity, lists the five factors of production, explains how the production possibilities frontier model illustrates scarcity and opportunity costs, and outlines how the frontier can shift from technological improvements or increased resources. It also provides examples of how microeconomic concepts are relevant to business and policy decisions.

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    This document provides an overview and outline of topics to be covered in a microeconomics lecture. It discusses key microeconomic concepts like scarcity, factors of production, and the production possibilities frontier. Specifically, it defines scarcity, lists the five factors of production, explains how the production possibilities frontier model illustrates scarcity and opportunity costs, and outlines how the frontier can shift from technological improvements or increased resources. It also provides examples of how microeconomic concepts are relevant to business and policy decisions.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    174 views25 pages

    Micro Economics....

    Uploaded by

    Biswajit Maity
    This document provides an overview and outline of topics to be covered in a microeconomics lecture. It discusses key microeconomic concepts like scarcity, factors of production, and the production possibilities frontier. Specifically, it defines scarcity, lists the five factors of production, explains how the production possibilities frontier model illustrates scarcity and opportunity costs, and outlines how the frontier can shift from technological improvements or increased resources. It also provides examples of how microeconomic concepts are relevant to business and policy decisions.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 25

    Microeconomics

    Lecture 2

    Overview of the Previous Lecture


    Microeconomics & Macroeconomics Positive vs. Normative Economics Markets Competitive vs. Non-competitive Market Extent

    Topics to be Discussed
    Problem of Scarcity Factors of Production Production Possibility Frontier

    Economics; Another Perspective


    Economics is the study of the choices made by people who are faced with Scarcity is a situation in which scarcity.

    resources are limited but can be used in different ways; so one good or service must be sacrificed for another.

    Societys Choices

    The decisions of producers, consumers and government determine how an economic system answers three fundamental questions:

    1. What products do we produce?


    2. How do we produce these products? 3. Who consumes the products?

    Factors of Production
    Factors of production are the resources that are used to produce goods and services:
    1. Natural resources: The things created by acts of nature such as land, water, mineral, oil and gas deposits, renewable and nonrenewable resources.

    Factors of Production
    2. Labor: The human effort, physical and mental, used by workers in the production of goods and services.

    Factors of Production
    3. Physical capital. All the machines, buildings, equipment, roads and other objects made by human beings to produce goods and services.

    Factors of Production
    4. Human capital: The knowledge and skills acquired by a worker through education and experience.

    Factors of Production
    5. Entrepreneurship: The effort to coordinate the production and sale of goods and services. Entrepreneurs take risk and commit time and money to a business without any guarantee of profit.

    The Production Possibilities Frontier (PPF)


    The PPF curve shows the possible combinations of goods and services available to an economy, given that all productive resources are fully and efficiently employed.

    The Production Possibilities Frontier (PPF)


    When the economy is at point i, resources are not fully employed and/or they are not used efficiently.

    The Production Possibilities Frontier (PPF)


    Point g is desirable because it yields more of both goods, but not attainable given the amount of resources available.

    The Production Possibilities Frontier (PPF)


    Point d is one of the possible combinations of goods produced when resources are fully and efficiently employed.

    Scarcity and the PPF


    To increase the amount of farm goods by 10 tons, we must sacrifice 100 tons of factory goods.

    The Production Possibilities Frontier (PPF)


    The PPF curve is bowed out because resources are not perfectly adaptable to the production of the two goods. As we increase the production of one good, we sacrifice progressively more of the other.

    Shifting the PPF Curve


    To increase the production of one good without decreasing the production of the other, the PPF curve must shift outward.

    Shifting the PPF Curve


    The PPF curve shifts outward as a result of: An increase in the economys resources OR A technological innovation that increases the output obtained from a given amount of resources

    Shifting the PPF Curve


    From point d, an additional 200 tons of factory goods or 20 tons of farm goods are now possible (or any combination in between).

    Summary
    Scarcity & Choices Factors of Production Natural Resources Labor Physical Capital Human Capital Entrepreneurship Production Possibility Frontier

    Why Study Microeconomics?


    Microeconomic concepts are used by everyone to assist them in making choices as consumers and producers.

    Why Study Microeconomics?


    Two Examples Corporate Decision Making Ford & development of its Sport Utility Vehicle (SUV) Public Policy Design Deregulation of telecommunication policy

    Why Study Microeconomics?


    Ford & development of its Sport Utility Vehicle (SUV) Questions Consumer acceptance and demand Production cost Pricing strategy Risk analysis Organizational decisions Government regulation

    Why Study Microeconomics?


    Deregulation of Telecommunication policy
    Questions Impact on consumers Impact on service providers How to enforce the policy What are the benefits and costs?

    Upcoming Topics
    Real Prices vs. Nominal Prices Demand and Supply: Basic Concepts Market Mechanism

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