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1.29.2016

ECN 201- Introduction to Economic

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So this is the complete lecture note on Introduction to Economics... Just in case you missed the lecture or you don't have the complete note.
Economics is a social science that studies the relationship between human wants and limited resources and how to satisfy them. 

The study of economics brought the rise of the following:
Scarcity:This refers to the fact that available resources are in short supply in comparison to the ability to satisfy human wants. 
When something is scare, it doesn't mean it's completely unavailable but it's needs exceeds it's available resources.
Scarcity demand > supply. 

Choice: This is the decision to use available resources to satisfy particular wants and exclude other wants. It is the decision one makes to satisfy more pressing needs. 

Opportunity cost: also known as real cost arises as a result of Scarcity and choice, It refers to the wants we exclude and do not satisfy when we make a choice. 

Scale of preference: It refers to a priority ranking of our needs in descending order of importance. 

Difference between wants and needs. 
Want is something we desire and wish to acquire but may not be really important. 

Need is something that is of high importance and value which we can't do without i.e food, clothing and shelter. 

TYPE OF ECONOMICS
1) Micro-economics
2) Macro-economics

Micro Economics is concerned with the study of individual economic agents such as consumers, producers, households in their economic environment and deals with 
1) Optimal maximization of output 
2)Distribution of output 
3) Organization in production 
It also covers,
1) Theory of consumer behavior 
2)Theory of the firm
3)Theory of value
4)Theory of distribution 

Theory of consumer behavior: It's concerned with how consumers or buyers distribute their limited income in order to achieve maximum utility (utility is the satisfaction derived from consumption of a particular good/services)  

Theory of firm: It deals with how business organizes production, How they determine desired output rate and choice of cost minimization 

Theory of value: concerned with determination of relative prices 

Theory of Distribution: Deals with welfare aspect of economics

Macro-economics is concerned aggregate economics and centers around 
1)Unemployment 
2) Inflation 
3) Income stability

Methods of Macro-economics
1)Scientific method
2)Economic models
3)Deduction 
4) Induction 

Scientific method involves the assembling of facts, acquisition of the language, attraction and assumption, predictions and implications, testing and prediction for the purpose of either verification or falsification. 

Economic models is a simplified,analytical framework for the purpose of arriving at definition of problem, lining up or formulation of qualitative theory. 

Deduction involves the prediction of the future cost of the event by means of theory. The logical process of reasoning by which inferences are drawn for the present or the future. 



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