Microeconomics Business Operations. Warm Up What is microeconomics?
MICROECONOMICS ECS201
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Transcript of MICROECONOMICS ECS201
MICROECONOMICS
ECS201
WELCOME
WHAT ARE WE DOING TODAY?
Who am I?What to do and not to doMeans of communicationADC servicesUnisaAnalyze your study skillsWhat do you see?Chapter 1Chapter 2Questions
ADC SERVICES
Delivering academic support regarding:Time ManagementStudy SkillsExam Preparation and TechniquesStress Management
Professional development of lecturers.
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To do or not to do …
MEANS OF COMMUNICATION
After class Student Support Office @ student reception By appointment By e-mail: [email protected] Phone: (012) 348-2551 Website!!!
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UNISA PROCEDURES Registrations Tutorial letter 1 MyUnisa Assignments Important dates Prescribed textbook Exam entry
YOUR UNISA REGISTRATION
Questionnaire Different types of learners Analyse Assist
LET’S ANALYZE YOUR STUDY SKILLS
WHAT DO YOU SEE?
WHAT DO YOU SEE?
CHAPTER 1Preliminaries
What is Microeconomics?
OUTCOMES Nature and importance of
microeconomics The workings of a market Real and Nominal prices
Economics
Microeconomics
Macroeconomics
Public Economics
MonetaryEconomics
Finance Economics
International Economics
DevelopmentEconomics
Equips us to answer questions Explain irregularity in our everyday lives Provide the background for other economic
disciplines Knowledge of basic economic theory Application of basic economic theory Gain insight in social and economic events
WHY?
Help us predict what is likely to happen
WHAT IS MICROECONOMICS?
Trade-offs Prices and Markets Theories and Models Positive and Normative analysis Nature of Markets Real versus Nominal prices Why study Economics?
THEMES OF MICROECONOMICS
Optimal Trade-Off
Consumers- Limited income
- Trade-off for maximized well-being
Workers- When to enter
workforce- Work or
education?
Firms- What to produce?
- Resource available
THEMES OF MICROECONOMICS- TRADE-OFFS
Theory of the firm
Consumer Theory
•Trade-offs•e.g. Labour: Work for pleasure•Centrally planned economy = Prices set by government•Market economy = Prices determined by consumers, workers, firms
Prices
•Interactions to determine price
Markets
Prices and Markets
LIMITED RESOURCESTHEORIES AND MODELS
Theories = Explanations & Predictions
Model = Mathematical representation
LIMITED RESOURCESPOSITIVE AND NORMATIVE
ANALYSIS
Positive- Central to microeconomics
- Explanations and predictions
- Describe relationships of cause and effect
Normative- Go beyond explanations
and predictions- “What is best?”
- Examine questions of what ought to be
MARKET
Definition: Collection of buyers and sellers Through actual or potential interactions Determine price of a product Or, set of products
Market = More than an industry Industry: Collection of firms that sell
same/closely related products. Potential interactions & actual interactions Arbitrage:
Significant difference in price of commodity Practice of buying low @ one location & sell
high at another location
MARKET
Competitive marketPerfectly competitive: Many buyers and
sellers e.g. agricultural markets Noncompetitive market
Many producersCartel: Group of producers act collectively
Market price:Competitive market = Single price = market
priceNot perfectly competitive = Different prices
Average price = Market price
MARKET
Market Definition:Buyers and sellers
Extent of the market:Determine which buyers and sellersBoundaries of a marketGeographical and i.t.o. range of products
Market definition importance:1. Understand who is actual and potential
competitors2. Public policy decisions
REAL VS NOMINAL PRICES
Nominal prices:Absolute price“Current-dollar”
Real prices:Price relative to aggregate measure of
prices“Constant-dollar”
Consumer Price Index Producer Price Index
IMPOTANT CONCEPTS CETERIS PARIBUS
Assumption used when designing models.Meaning: All variables other than the one
economist use will remain unchanged.Latin expression: “All other things being
equal” EQUILIBRIUM
Important in economic theoryA situation, once it has been reached, tends
to persistAll factors in balance.
IMPORTANT CONCEPTS
IMPOTANT CONCEPTS PRICES
MACRO = Absolute prices i.e. price of goods and services
MICRO = Relative prices i.e. relationship between price in question and price of other products
RATIONAL INDIVIDUALSBehave rationallyWell off given limitations
MALE OR FEMALE?“He” merely used for practical reasons
IMPORTANT CONCEPTS