MICROECONOMICS Session 2

1. Set you cell phones on silent mode. 2. We will start on time (5:30 p.m.) and end on time (7:30 p.m.). 3. When speaking, talk to the farthest person in the

When somebody else is speaking, listen.
room.

2. Acquire basic principles in determining cost and profit. the students will be able to: 1.Upon completion of the course. 4. 3. Develop a high sense of social responsibility in business towards the improvement of the country·s economy in general. . Relate theories and concepts to practical situations happening in the field of business. Understand the different market structures of firms and how these affect the welfare of consumers.

Midterm Grade ` 15% ² Attendance and class participation.Midterm Exam 100% .Project 50% . a point will be deducted against this total. 20% -Quizzes 15% . Every time you are late (arrival in class after 5:45pm).Total ` ` ` ` .

Total Final Grade MT Grade (50%)+ FT Grade (50%)=100% .Final Term Grade ` 15% ² Attendance and class participation.Final Exam 100% . a point will be deducted against this total. Every time you are late (arrival in class after 5:45pm). ` ` ` ` 20% -Quizzes 15% .Project 50% .

` Introduction ` Lecture ` Discussion ` Recitation to the course 6 .

"custom" or "law"). "management of a household.` ` ` Economics is the social science that analyzes the production. distribution. hence "house") + "rules of the house(hold)". Economics is the study of how we individually and collectively make our choices. and consumption of goods and services. The term economics comes from the Ancient Greek (oikonomia. . (nomos. administration") from (oikos.

and packaging. Production is a process. Some economists define production broadly as all economic activity other than consumption.` ` Production refers to the economic process of converting of inputs into outputs. shipping. Production uses resources to create a good or service that is suitable for exchange. . production is measured as a ´rate of output per period of timeµ. They see every commercial activity other than the final purchase as some form of production. storing. Because it is a flow concept. and as such it occurs through time and space. This can include manufacturing.

` A production process can be defined as any activity that increases the similarity between the pattern of demand for goods and services. length and distribution of these goods and services available to the market place 9 . shape. form. ` the form of the good or service created. size. and the quantity.There are three aspects to production processes: ` the quantity of the good or service produced. ` the temporal and spatial distribution of the good or service produced.

` Distribution in economics refers to the way total output or income is distributed among individuals or among the factors of production (such as labour. and capital). . land.

` Consumption is a common concept in economics. production and marketing of goods and services (e. disposal and recycling of goods and services") . and gives rise to derived concepts such as consumer debt. as the aggregate of all economic activity that does not entail the design. consumption is defined in part by opposition to production. Generally.g. "the selection. Other economists define consumption much more broadly. adoption. use.

Activity Since grade school. we have been taught that there are several basic human needs. that human beings need to survive? . Can you recall two other basic needs. aside from food.

the unemployment rate. and price inflation . technological change and labor force growth . Macroeconomic analysis also considers factors affecting the long-term level and growth of national income. Such factors include capital accumulation.Macroeconomics examines the economy as a whole the national income and output.

make decisions to allocate limited resources. . the household and the firms.` Microeconomics (from Greek meaning "small" + "economics") prefix micro- ` a branch of economics that studies how the individual parts of the economy.typically in markets where goods or services are being bought and sold.

and how prices. determine the supply and demand of goods and services . which determines prices. in turn.` Microeconomics examines how these decisions and behaviors affect the supply and demand for goods and services.

and unemployment. inflation.` This is a contrast to macroeconomics. . dealing with the issues of growth. Microeconomics also deals with the effects of national economic policies (such as changing taxation levels) on the before mentioned aspects of the economy. which involves the "sum total of economic activity.

geographic scale.` ` ` A market is any one of a variety of different systems. institutions. Markets vary in size. procedures. social relations and infrastructures whereby persons trade. so that there is competition on at least one of its two sides. and separates market from trade. 17 . location. Two persons may trade. range. Competition is essential in markets. types and variety of human communities. and goods and services are exchanged. but it takes at least three persons to have a market. It is an arrangement that allows buyers and sellers to exchange items. as well as the types of goods and services traded. forming part of the economy.

or intentions. The term demand signifies the ability or the willingness to buy a particular commodity at a given point of time.` ` is the desire to own anything and the ability to pay for it and willingness to. with the respect to the purchase of a product 18 . Is simply a statement of a buyers plans.

the quantity demanded falls. and as price rises. There is a negative or inverse relationship between price and quantity demanded. 19 .` ` ` A fundamental characteristics of demand is this: All else equal . as price falls the quantity demanded rises.

20 .

` ` ` ` Tastes ( new product) Number of buyers Income Substitutes 21 .

22 .` supply is the amount of some product producers are willing and able to sell at a given price all other factors being held constant. Usually. supply is plotted as a supply curve showing the relationship of price to the amount of product businesses are willing to sell.

the quantity of goods or services offered by suppliers increases and vice versa. as the price of a good or service increases.. all other factors being equal.` A microeconomic law stating that. 23 .

24 .

Take care of your Habits because they will form your Character. Take care of your Character because it will form your Destiny. Take care of your Words because they will become Actions. Take care of your Actions because they will become Habits. The Dalai Lama . and your Destiny will be your Life.` ` ` ` ` Take care of your Thoughts because they become Words.

What are the factors affecting supplies? 26 .

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