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Chapter 1 - For Student

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14 views

Chapter 1 - For Student

Uploaded by

19. Vũ Anh Khoa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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CHAPTER 1

INTRODUCTION TO MICROECONOMICS

Content

 Microeconomics
 Basic questions in economics
 Economic choice

1
Chapter 1: Introduction

I. Microeconomics
1. The economy
Household

Input market Government Output market

Firm

I. Microeconomics
1. The economy

- There are at least 3 members in any economy, which


interacting with each other in a certain regime.

 Interacting regimes:
- planning economy (1)
- market economy (2)
- mixed economy (3)
1 3 2

Cuba US, UK,


Hong
Japan...
Kong

2
I. Microeconomics
2. Some definitions

Scarcity: When the needs are greater than the


supplying ability

Commodities: Tools to satisfy people’s needs


Resources: Inputs used to produce commodities to
satisfy people’s needs, including:
+ Labour (L)
+ Materials (M)
+ Capital (K)

I. Microeconomics
3. Microeconomics and macroeconomics

 Economics: study how society allocates scarce


resources for competitive goals
 Microeconomics:study the behavior of each
member in the economy
 Macroeconomics: study the economy as a whole
Microeconomics Macroeconomics Econometric

ECONOMICS

3
II. Basic economic issues

 3 questions
WHAT?

HOW?

FOR WHOM?

III. Economic choice

1. Choice’s principles
- Need to choose because of scarce resources. If
resource is already spent on A, it can not be spent on B
- Many ways to spend resources → easy to choose

2. Choice’s target
- Household: Optimize benefit
- Firm: Optimize profit
- Government: Optimize social welfare

4
III. Economic choice

3. Choosing tool
- Opportunity cost (OC): The value of the best missed
chance when making a choice
- Marginal thinking
+ Marginal cost (MC): The change in total cost resulting
from a change from quantity
∆TC
MC = = TC '( Q )
∆Q
+ Marginal benefit (MB): The change in total benefit
resulting from a change from quantity
∆TB
MB = = TB '( Q )
∆Q

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