Intro to ECON_Chapter 1
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Transcript of Intro to ECON_Chapter 1
ECONOMICS FOR SOUTH AFRICAN STUDENTS
CHAPTER 1:
WHAT IS ECONOMICS?
ECON-1
THE ECONOMY VS.
Studying Economics
HOW WOULD YOU DESCRIBE THE STUDY OF ECONOMICS?
NeedsResources
Scarcity
Choice
Opportunity cost
ECONOMISTS LIKE GRAPHSScarcity, choice and opportunity cost can be illustrated with the production possibilities frontier.
• What is the production possibilities frontier?• The example of the production of fish and potatoes...
Option Fish (baskets per day)
Potatoes (kg per day)
A 0 100
B 1 95
C 2 85
D 3 70
E 4 40
F 5 0
FIGURE 1-1Option Fish
(baskets per day)
Potatoes (kg per day)
A 0 100
B 1 95
C 2 85
D 3 70
E 4 40
F 5 0
FIGURE 1-1
Cannot be produced with available resources
Society has to choose:
C = 2 baskets fish and 85kg potatoes
D = 3 baskets fish and 70 kg potatoes
What is the opportunity cost of
One more basket of fish?
THE SCIENCE OF ECONOMICS
Social science...• There are laws – it is differs from the natural sciences• LAW of DEMAND!
• What is demand again?• Ceteris paribus
2 HOOFDELE VAN DIE STUDIE VAN EKONOMIE
Economics
MACROThe economy
as a whole
MICROIndividual
participants