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PRINCIPLES OF MICROECONOMICS CHAPTER 1 - Coggle Diagram
PRINCIPLES OF MICROECONOMICS CHAPTER 1
DEFINITION OF ECONOMICS
Economics is about human behaviours as a relationship between ends and scarce which have alternative uses.
How people use their resources to try to fulfil unlimited wants and involves alternatives or choices.
MICROECONOMICS
About individual parts of the economy
Example : Public choices
MACROECONOMICS
About a whole of economics system
Example : Inflation
POSITIVE ANALYSIS
To deal with a question of "what is"and no indication of approval and disopproval
Focuses on facts and cause effects relationship
NORMATIVE ANALYSIS
To deal with a question of "what ought to be".
It incorporates value judgements about what the economy should be or what policy should be used to achieve economic goals.
BASIC ECONOMICS CONCEPT
SCARCITY
The main basic in economics
defined as wants always exceed limited resources to satisfy them.
universal problem faced by poor as well as rich nations in order to fulfil their needs.
CHOICE
When scarcity exists, choices are to be made.
OPPORTUNITY COST
defined as the second best alternative that has to be forgone for another choice which gives more satisfaction.
BASIC ECONOMICS PROBLEM
What to produce -the type of goods and services to be produced
How to produce -the cheapest method of production
For whom to produce - the distribution of income
PRODUCTION POSSIBILITIES CURVE (PPC)
Shows the various possible combinations of goods and services produced within a specified time period with all its resources fully and efficiently employed.
(cont)-full efficiency
-The amount of resources available are fixed.
-The state of technology does not change throughout the production.