Pengantar Teori Ekonomi Mikro

Pertemuan 1
 Text Books
• Utama:
Economics 19ed,
Paul A.Samuelson & William Nordhaus
(UTS: ch. 1- 6 & UAS: ch. 6-12)
What is Economics ??
Economics is the study of how societies use
scare resources to produce valuable
goods and services and distribute them
among different individuals
Why Study Economics ?
 Why Study Economics ?

So that we can be rich and get job?

 Why Study Economics ?

So that we can be rich and get job?

NO !!!
 Why Study Economics ?

So that we can be rich and get job?

NO !!!

So we could understand why we are poor

an unemployed
 Why economics born?
UNLIMITED
human desires

Vs.

LIMITED
quantities of goods & services that can be produced
 Why economics born?
UNLIMITED
human desires

Vs.

LIMITED
quantities of goods & services that can be produced

Economic Goods
 Facts of Life

Economic Goods > Free Goods

SCARCITY
 Economic Efficiency
• An Economy produce the highest combination
of quantity and quality of goods and services
given its technology and scare resources
 Facts of Life

Economic Goods > Free Goods

Efficiency SCARCITY ???

 Efficiency...
• The most effective use of a society’s
resources in satisfying people’s wants and
need.
 Efficiency...
• The most effective use of a society’s
resources in satisfying people’s wants and
need.

• The economy is producing efficiently when it

cannot increase the economic welfare of
anyone without making someone else worse
off
 Facts of Life

Economic Goods > Free Goods

Efficiency SCARCITY Problem of

Choice

Trade-off

Opportunity
Cost
Production-Possibility Frontier (PPF)

show the maximum amounts of production

that can be obtained by an economy, given its
technological knowledge and quantity of inputs
available. The PPF represents the menu of
goods and services available to society
 PPF Asumptions

1. Limited resources

2. Certain level of technology

3. Economy on full-employment
 THE PRODUCTION –POSSIBILITY FRONTIER

Possibilities Butter( million of Guns

pounds )‫‏‬ (thousands)‫‏‬
A 0 15
B 1 14
C 2 12
D 3 9
E 4 5
F 5 0
Disiapkan oleh atik purmiyati
THE PRODUCTION-POSSIBILITY CURVE
GUN

BUTTER
THE PRODUCTION-POSSIBILITY CURVE
GUN

Inneficiency Scarcity

Trade-off

Opportunity Cost

BUTTER
The three problems of economic
organization

1. What ?

2. How ?

3. For whom ?
 Definition of Economics...
• The study of how man and society choose, to
use scarce productive resource that could
have alternative uses, to produce
commodities in various kind and distribute
them among different groups.
Microeconomics vs. Macroeconomics
• Microeconomics
– Concerned with behaviour of individual entities
such as markets, firms, and households.
– Studied how individual prices is set (commodities
and factors of production)
– Adam Smith, The Wealth of Nation, 1776
Microeconomics vs. Macroeconomics
• Macroeconomics
– Concerned with overall performance of economy.
– Economic growth, Inflation, Unemployment, etc.
– John Maynard Keynes, Theory of Employment,
Interest and Money, 1935.
The three problems of economic
organization

1. What ?

2. How ?

3. For whom ?
 Answer...
• Depends on economic system that society use
to allocate its scarce resources...
 Answer...
• Depends on economic system that society use
to allocate its scarce resources...

• Two fundamentals systems (+1):

1. Market economy
2. Command economy
Mixed economy
 Market System
• Individuals and private firms make the
decisions about production and consumption.
 Market System
• Individuals and private firms make the
decisions about production and consumption.
1. Firms produce the goods that yied highest profit
(What?)
2. By the technique of production at least cost
(How?)
3. Consumption is determined by individuals
decisions about how they spend their income
(For whom?)
 Market System
• The government keeps it hand off from
economic decisions  Laisses-faire economy

• “Invisible hand” doctrine:

– In selfishly pursuing only his or her personal good,
every individual is led, as if by an invisible hand, to
achieve the best good for all
 “Invisible hand” doctrine

“it is not from the benevolence of the butcher,

the brewer or the baker that we expect our
dinner, but from their regard to their own self
interest”

(Adam Smith, The Wealth of Nation, 1776)

 Command Economy
• The government makes all important decisions
about production and distribution by ownership
of resources and its power to enforce decisions.

• Example: Soviet Union

• Goverment own most of means of production,

owns and direct the enterpises, employer of most
workers, decide how the output distribute among
society.
 Market Failures:
The Role of Government

• Innefficiency
– Monopoly
– Externalities
– Public goods
• Inequality
• Macroeconomic problem
– Business cycles (inflation & unemployment)
– Slow economic growth
 Market Failures:
The Role of Government
• Innefficiency
– Monopoly  Antitrust law
– Externalities  Antipolution laws
– Public goods  Build lighthouse, road, etc

• Inequality
 Progressive tax, BLT

• Macroeconomic problem
 Monetary & Fiscal Policies
 END OF LECTURE
• NEXT WEEK

– Market

– Market mechanism

– Demand

– Supply