Class 01

Basic Economics
Goods, Bads, Resources, Scarcity and Opportunity
Cost
Basic Concept
Goods and Bads

Goods provide utility or Tangible and intangible Bads cause disutility or

satisfaction. goods. dissatisfaction.
Resources
● Economists categorize resources into
land, labor, capital, and
entrepreneurship
● Land includes natural resources such
as minerals, forests, and water
● Labor is the physical and mental
talents that people contribute to the
production process
● Capital is produced goods used as
inputs for further production
● Entrepreneurship refers to the talent
of organizing resources to produce
goods and seek new business
opportunities
Scarcity
● Scarcity is the state where wants exceed the limited
resources available to satisfy those wants.
Economics

● Economics is the science

of scarcity, how
individuals and societies
deal with satisfying
unlimited wants with
limited resources.
Categories of Economics
An overview of the four common economic
categories: positive economics, normative
economics, microeconomics, and
macroeconomics.
Positive and Normative Economics
● Positive economics attempts to determine what is.
● Normative economics addresses what should be.
● Positive economics deals with cause-effect relationships
that can be tested.
● Normative economics deals with value judgments and
opinions that cannot be tested.
● Many topics in economics can be discussed in both a
positive and a normative framework.
● For example, a proposed cut in federal income taxes can be
discussed from both perspectives.
Microeconomics vs Macroeconomics
● Microeconomics deals with human behavior and
choices as they relate to relatively small units.
● Macroeconomics deals with human behavior and
choices as they relate to an entire economy.
● Microeconomics examines a single price;
Macroeconomics discusses the price level.
● Microeconomics deals with the demand for a
particular good or service; macroeconomics deals
with aggregate, or total, demand for goods and
services.
● Microeconomics examines how a tax change affects
a single firm’s output; macroeconomics looks at how
a tax change affects an entire economy’s output.
 Tools of Microeconomics and Macroeconomics

Microeconomics uses Microeconomics

microscopes to examine 02 examines the tree itself,
individual units. its bark, its limbs, and its
roots.

01 03
Macroeconomics uses Macroeconomics looks at
telescopes to stand back the forest as a whole.
and examine the entire
economy. 04
Importance of Economics
for Engineers:

1. Understanding of Economic Factors

2. Project Feasibility Analysis
3. Resource Allocation
4. Economic Impact Assessment
5. Entrepreneurship and Innovation
6. Interdisciplinary Collaboration
 Summary:

1. Goods, Bads, Resources, Scarcity and

Opportunity Cost.
2. Economics
3. Positive and Normative Economics
4. Microeconomics vs Macroeconomics
5. Importance of Economics for Engineers
Thank you for your time 😊
Textbooks:

1. Economics; 11th Edition; Roger A. Arnold

2. Introduction to Air Transport Economics, Second Edition; Bijan Vasigh, Ken
Fleming & Thomas Tacker
3. Principles of Economics (10th Edition) , Karl E. Case, Ray C. Fair, Sharon M.
Oster