CENTRE FOR FOUNDATION STUDIES

(KAMPAR CAMPUS)
FOUNDATION IN ARTS
FHBM1014 PRINCIPLES OF ECONOMICS

1
 Lecturers Details

• Ms. Hazel Lim

Email: [email protected]

• Ms. Haw Ai Peng

Email: [email protected]

• Ms. Meera Devarajoo

Email: [email protected]

• Mr. Nawanithan Thanimalay

Email: [email protected] 2
 Programme Learning Outcomes (PLO)

Upon successful completion of the programme, students will

be able to:

1. Apply knowledge and tools in relevant functional areas

of business, arts and social sciences.
2. Apply techniques and skills learned to perform tasks in
relevant contexts.
3. Demonstrate communication skills, either in groups or as
individuals.
4. Implement critical thinking and problem solving skills in
relevant fields.
5. Exhibit ability in managing information for continuous
learning. 3
 Course Learning Outcomes (CLO)

Upon successful completion of the course,

students will be able to:

1. Apply the basic principles and theories in

microeconomics.
2. Analyse microeconomics and
macroeconomics issues in the real world.
3. Explain the basic principles and theories in
macroeconomics.
4
Mapping of Course Learning Outcomes (CLOs) to
Programme Learning Outcomes (PLOs)

PLO 1 PLO 4 Taxonomy Level

CLO 1  C3. Applying

CLO 2  C4. Analysing

CLO 3  C2. Understanding

5
 Mapping of Course Learning Outcomes (CLO) to
Assessment Question (AQ)

Assessment
Coursework Final Exam
Name
Question Midterm
Assignment  Presentation Section A Section B
Description test

CLO 1  
CLO 2  
CLO 3 

6
 Assessment Summary

% to Final
Assessment Assessment
Full Marks Marks
Weightage Method
(100%)

Continuous Midterm test 50 15%

Assessment 40% Assignment 100 15%
(Coursework) Presentation 50 10%
Section A 40
Final Exam 60% 60%
Section B 60

7
 Course Materials
• Lecture Notes
• Tutorial Questions
• Assignment Question

• Obtain from WBLE

http://wble.utar.edu.my

8
 References
Main Reference
• Tucker, I.B (2019). Economics for today. (10th ed.). Mason, OH:
Thomson South Western.
Additional References
• Bade, R. and Parkin, M. (2018). Essential foundations of economics.
(8th ed.). Boston: Pearson Addison Wesley.
• Mankiw, G. N. (2019) Essentials of economics (9th ed.). Mason, OH:
Thomson South Western.
• Sexton, L.R. (2020). Exploring economics. (8th ed.). Mason, OH:
Thomson South Western. 9
 Overview of Lecture Topics

Microeconomic Topics
Topic 1 – Introduction to Economics
Topic 2 – The Two Simple Economics Models
Topic 3 – Market Demand and Supply (Part 1)
Topic 4 – Market Demand and Supply (Part 2)
Topic 5 – Price Elasticity of Demand and
Supply

10
 Overview of Lecture Topics
Macroeconomic Topics
Topic 6 – Concepts of National Income:
GDP and GNP
Topic 7 – Macroeconomic Problems (Part 1)
Topic 8 – Role of Government
Topic 9 – Introduction To Money and Banking
Topic 10 – International Trade and
Globalization
11
Principles
Of

Topic 1 : Introduction To Economics

 Learning Objectives
1.1. Economics: Microeconomics and
Macroeconomics
1.2 Four categories of resources
1.3 The study of scarcity, choice and
opportunity costs
1.4 Positive and normative analysis
1.5 Basic economic problems

13
 Learning Objectives
(1.1)
Economics: Microeconomics and
Macroeconomics

14
 Introduction to Economics
a) The term economics comes from a Greek
word “oikonomos” (household management)
from “oikos” (house) + “nomos” (custom or
law), hence "rules for running the household”.

b) Def: Economics is the science that studies

how individuals and groups make decisions
with scarce (limited) resources as to best
satisfy their wants, needs, and desires.

15
 Introduction to Economics
c) Should economics be considered a science?
Why or why not?
Yes. Economics is the social science
studies. Economics uses models and
theories to make predictions and then tests
those predictions using empirical analysis.

d) We can break down the study of economics

into two broad categories:
- Microeconomics
- Macroeconomics 16
 Two Branches of Economics
a) Micro comes from Greek word mikros,
meaning “small”.
b) Microeconomics is the branch of economics
that studies the decision making behavior
of firms and households and their
interaction in markets for particular goods or
services.
c) Focuses on individual parts of an economy,
rather than the whole.
17
 Two Branches of Economics
d) Macro comes from Greek word, makros,
meaning “large”
e) Macroeconomics is the branch of economics
that studies the behavior, decision-making
and performance of an economy as a
whole. It focuses on the aggregate changes
in the economy such as unemployment,
growth rate, gross domestic product and
inflation.

18
Learning Objectives
(1.2)
Four Categories of Resources

19
 What Are Resources
a) Def: Basic categories of inputs used in the
production of goods and services.

b) Also known as factors of production (FOP).

c) Four types of resources:

- land
- labour
- capital
- entrepreneurship
20
 Factors of Production - Land
a) Def: Any natural resource used to
produce goods and services.

b) This includes not just land, but anything

that comes from the land - water, oil,
copper, natural gas, coal, and forests.

c) The income that resource owners earn in

return for land resources is called rent.

21
 Factors of Production - Labour
a) Def: Labour is the effort (physical and
mental) that people contribute to the
production of goods and services.
b) Exp: the work done by the waiter who
brings your food at a local restaurant as
well as the engineer who designed the bus
that transports you to campus.
c) The income earned by labor resources is
called wages or salaries.
22
 Factors of Production - Capital
a) Def: All non-natural (manufactured)
resources that are used in the creation and
production of other products.
b) Exp: A doctor may use a stethoscope and
an examination room to provide medical
services. Your teacher may use textbooks,
desks, and a whiteboard to produce
education services.
c) The income earned by owners of capital
resources is called interest.
23
 Factors of Production - Entrepreneurship

a) Def: The creative ability of individuals to

seek profits by taking risks and
combining resources to produce
innovative products.

b) The most successful entrepreneurs are

innovators who find new ways produce
goods and services or who develop new
goods and services to bring to market.
c) The payment to entrepreneurship is called
24
Learning Objectives
(1.3)
The study of scarcity, choice
and opportunity costs

25
 Scarcity and Choice
a) The problem of scarcity is regarded as the
fundamental economic problem arising from the
unlimited human wants in a world where
resources are limited.
b) People are not able to fulfill all their wants and
desires, material and non-material.
c) Scarcity force each of us to make choices.
d) This means each decision has a sacrifice in
terms of an alternative not chosen (opportunity
cost).

26
 Choice and Opportunity Cost
a) The next highest valued alternative that is
given up when a choice is made.

b) Can opportunity cost be something other than

money? Yes, the most desired good or service or
use of time that you are presently giving up is an
opportunity cost.

27
 Opportunity Cost - Example
• A student must decide how to allocate her
main resource which is time.
• Spend all the time studying economics
• Spend all the time studying maths
• Or divide the time between both
• For every hour spent on one subject, she
gives up an hour for the other.
• Every hour spent studying, hour gone on
leisure or work, etc.

28
Learning Objectives
(1.4)
Positive And Normative
Analysis

29
 Positive Statements
a) Positive statements are objective statements
that can be tested, amended or rejected by
referring to the available evidence.
b) Concerns what "is", "was", or "will be", and
contains no indication of approval or disapproval
(what should be)
c) However, positive statement can be factually
incorrect: "The moon is made of green cheese"
is empirically false, but is still a positive
statement, as it is a statement about what is, not
what should be.
30
 Normative Statements
a) Used to make value judgments, identify
problems, and prescribe solutions.

b) Normative statements are characterised by

the modal verbs "should", "would", "could"
or "must".

c) Normative statements cannot be proved

or disproved by the facts alone.

31
 Positive Analysis And Normative Analysis

• Positive analysis : Answers the question “What is?” or “What will be?”
• Normative analysis : Answers the question “what should do”

Positive Questions Normative Questions

• If the firm decreases the wage, • Should the firm decrease the
how many workers will lose wage?
their jobs?
• How does a college education • Should the government
affect a person’s productivity subsidize a college education?
and earnings?
• How do consumers respond to • Should the government cut
a cut in income taxes? taxes to stimulate the
economy?
32
Learning Objectives
(1.5)
Basic Economic Problems

33
 The Economic Problem
• What goods and services should an economy
produce?
• Should the emphasis be on agriculture,
manufacturing or services? Should it be on sport and
leisure or housing?

• How should goods and services be produced?

• Labour intensive, land intensive or capital intensive?
Efficiency?

• Who should get the goods and services produced?

• Even distribution? More for the rich? For those who
work hard? 34
EXERCISES

35
 April 2021

Identify whether each of the following statements applies

to microeconomics or macroeconomics.

1. The effect of increasing the money supply on inflation.

2. The purchasing decisions that an individual consumer
makes.
3. The effects of an increase in the tobacco excise duty on
cigarette sales.
4. Tariffs and import restrictions make most people worse off.
5. The reasons for the rise in the overall average prices on
goods and services.
6. Whether the army should buy more tanks or more rockets.
7. The effects of government budget deficit on inflation.

36
 December 2020

Identify whether each of the following statements applies

to positive statement or normative statement.

1. A 10% increase in income leads to a 4% increase in the

consumption of beef.
2. We should cut back on our use of carbon-based fuels
such as coal and oil.
3. Increasing the minimum wage results in more
unemployment.
4. The unemployment rate rose last month.

37
 December 2020

Identify the basic economic questions in the following

situations.

1. Firms in an economy start producing more computers and

fewer televisions.
2. China builds a dam using few machines and a great deal
of labours.
3. A textile company keeps track of its inventory using a
computer while its competitor uses a spreadsheet and
pencil.
4. People with higher income in an economy get to consume
more goods and services.

38
Reference
Tucker, I.B.(2017).
Economics for today. (9th
ed.). Mason, OH: Thomson
South Western.

39
The End

40