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Lecture 1: An Introduction To Economics: What Will Be Considered in This Unit?

This document provides an overview and introduction to the economics unit. It discusses what economics is as a social science, the different types of economists and their roles. It outlines the purpose of the unit to introduce basic economic frameworks and ways of thinking. It describes some key economic principles such as opportunity costs, incentives, and trade-offs. It also discusses how economists use models, data and analysis to study individual, business and government decision-making.

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jtzamora05
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41 views39 pages

Lecture 1: An Introduction To Economics: What Will Be Considered in This Unit?

This document provides an overview and introduction to the economics unit. It discusses what economics is as a social science, the different types of economists and their roles. It outlines the purpose of the unit to introduce basic economic frameworks and ways of thinking. It describes some key economic principles such as opportunity costs, incentives, and trade-offs. It also discusses how economists use models, data and analysis to study individual, business and government decision-making.

Uploaded by

jtzamora05
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Lecture 1: An Introduction to

Economics
What will be considered in this unit?
What is economics?
• A set of frameworks for analysing the
interaction of individuals, groups,
governments and countries in relation to the
exchange of goods, services, money and
information.
• Economics is another perspective on
individual and social behaviour
• It is a social science that sometimes uses
techniques derived from the sciences
Economics & the knowledge tree
Philosophy

Politics Natural sciences

Economics Psychology
Biology
Maths
Physics
Economists in Action
• Macro-economists: Studying national economies
– advising governments
– private financial market advice
• Micro-economists: Studying particular markets
– labour economists
– natural resource economists
– social economists (eg the economics of crime)
Purpose of the unit
• To introduce the basic frameworks
• To introduce you to the ‘economic way of
thinking’
– ‘How would an economist analyse this issue?’
• To familiarise you with the language
• To develop the capacity to interpret basic
economic data
If you understand economics you have
the potential to:
• Better understand the factors that most affect
businesses
• Better understand human behaviour
• Anticipate economic trends, such as interest rate
and the share market
• Make better choices in your private and work
lives
• Make better use of knowledge gained in
other disciplines
The Level of This Unit
• A lot of assumptions and simplifications are
used in order to get to basic concepts
• Concepts reflect tendencies in the ‘real
world’ but do not explain every detail
• Focuses on mainstream economics
– There is considerable debate on many ideas
• Later units explain and qualify more of the
assumptions
Some of the Ten Principles
1. Decisions mean trade-offs
• Individuals
– Time, money & life choices
• Business
– Expenditure, product, investment
• Governments
– Equity vs efficiency
– Taxations vs welfare
– Freedom vs regulation
2. Opportunity Cost
• The true cost of a decision is what you ‘give
up’
• True cost = explicit cost (money outlayed)
+ implicit cost (things you forego)
3. Rational people think at the
margin
• Modern microeconomics is based on the
idea of considering the next step
– The satisfaction gained from consuming one
more item (marginal utility)
– The cost of producing one more item (marginal
cost)
– Don’t focus on average costs or returns or sunk
costs
• The economics of the ‘next step’
4. People Respond to Incentives
• Examples
– Lower income tax & higher consumption
– Higher sales tax on cigarettes & lower
consumption
• But, beware the unintended consequence
– Eg increased garbage dump prices & littering
5. The ‘universal’ benefits of trade
• Specialisation in production and trade leads
to a net increase in available goods
• The basis of industrial modernisation
6. Markets are a good way to
organise economic activity
• Freedom of consumption & production
• Relatively efficient exchange system
• Consumer demand is the key market signal
7. Governments can sometimes
improve markets
• Market failure
– Externalities (eg pollution)
• Public goods (eg defence)
• Social decisions
• Monopoly or unfair power relationships
Thinking Like an Economist
Economist as Scientist
• The Use of Assumptions
– eg Consumption behaviour
– Stock market behaviour
• Theories
• The Use of Models
• Observation & Data collection
An Example of an Economic
Model
The Circular Flow
• A mind map for thinking about the
economy
• Identifies the economists’ ‘building blocks’
• Differentiates goods and factor markets
• Shows the economy as an interconnected
system
Factor Markets
Factors of Firms’
Production Expenditures

Households’ Factors of
Income Production

Households Firms

Goods & Firms’


Services Incomes

Household Goods &


expenditure Services
Product Markets
Economic Sectors
• Firms
• Households
• Government
• Overseas
– replicates each of the other sectors
• Known as the four sector model
The Economist as Policymaker
• National accounting
• Studying economic trends
– Warnings and implications
• Analysing policy options
• Estimating the ‘true’ cost of actions
Statements
Positive vs Normative
• A description of ‘what • A comment on ‘what
is’ ought to be’
• ‘Taxes for the
wealthiest 20% of the
population have • ‘The rich should be
increased in the last 5 taxed in order to
years.’ provide money for the
• * May be incorrect but poor.’
still positive.
Applied economics influences:
• Interest rates
• Exchange rates
• Industry assistance
• Taxation levels
• Allowances and benefits (eg Austudy)
• Trade rules
Reading
• Stonecash et al. (text) Chapters 1, 2 &
Appendix in Chapter 2, for discussion of
graphs in economics

• Hakes & Parry (study guide) Chapters 1, 2


Self-Test (Hakes & Parry): Chapter 1
• Match all Terms & Definitions
• Do both Practice Problems
• Do Short Answer Questions
– 2, 4, 5, 7, 8, 9, 10, 11 & 13
• Do all True/False Questions
• Do Multiple Choice Questions
– 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 16, 17, 18, 19
• Make notes to answer Advanced Critical Thinking
– Questions 1 to 4
• Check answers in guide and revise accordingly
Self-Test (Hakes & Parry): Chapter 2
• Match all Terms & Definitions
• Do Practice Problems 1, 2, 3 & 4
• Do Short Answer Questions
– 3, 4, 5, 6, 7, 8, & 10
• Do all True/False Questions
• Do Multiple Choice Questions
– 1, 2, 4, 5, 6, 7, 8, 10, 12, 13, 14, 15, 16, 18 & 19
• Make notes to answer Advanced Critical Thinking
– Questions 2, 3 & 4
• Check answers in guide and revise accordingly
Course information
Lectures
• Notes available in advance
– USQconnect
• Study desk
• Overview of main themes
• Explanation of notes
• Assessment tips
Economics Workshops
• 2 hour session with 2 segments
– 1. Peer assisted Learning
– 2. Tutorial
• Workshops start tomorrow (Friday)
• Changes to workshop (tute) registration are to be
made only through unit leader
• Changes in tute enrolment only to those that are
not full
– Reviewed as places become available
Workshop offerings
• 10 workshops based on full enrolment
• Some may eventually be phased out
• Depending on attendance
• All tutes are on from tomorrow until further
notice
Responsibilities
• Lecturer deals with
– All administrative arrangements
– Complaints and concerns
– marking moderation
• Tutors:
– elaborate on main concepts and techniques
– mark assignments
– address content-related questions
Responsibilities (cont.)
• PALS (Peer Assisted Learning) Leaders
– Develop study skills
– Prepare students for assessment
– Conduct activities to facilitate learning
– They do not deal with admin or assessment
issues
Class behaviour
• Consideration for others in lectures &
workshops
• Civility & politeness
• Completing assigned work
• Switch off mobile phones in class
Assessment
• 2 Web Tests
– based on any notes or discussion from lectures,
tutorials or PALS & activities set in tutorials or
PALS
– 25 multiple choice questions
– Tests open 5pm-8pm
• Test 1 Wednesday April 16
• Test 2 Wednesday May 28
– You must complete test in one attempt
• Once you start you must complete & submit
• Assignment
– Topic on Study Desk site or External study
intro book
– Due May 9
Exam
• 30 Multiple Choice
• 5 Short Answer questions
• 2 Extended response (small essay)
• Largely based on the recommended
exercises and questions from the study
guide (Hakes and Parry)
News and announcements
• USQconnect
– ECO 1000 study desk
• Announcements
• Assessment
• Discussion
• Unit leader monitors discussion
Consultation
• Geoff Cockfield
– Monday: 1-4 (unavailable March 24)
– Thursday 2-5
– After lectures for admin issues and questions
arising from the lecture
– Other times available strictly by appointment
only
• Tutors
– to be announced in Tutes

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