Economics

Raya Anwari

Fundamental of Economics
Studies how the prices of labor, capital and land are set in the economy, and how those prices are used to allocate resources. Explore the behavior of markets of the financial markets, and analyze how they allocate capital to the rest of economy Examine the distribution of income, and suggest way that the poor can be helped without harming the performance of the economy Looks at the impact of the government spending, taxes, and budget deficits on growth. Studies the swings in the unemployment and production that make up the business cycle, and develops government policies for improving economics growth Examine the patterns of trade among the nations, and analyze the impact of trade barriers Looks at growth in developing countries, and proposes ways to encourage the efficient use of resources.

Fundamental of Economics
Economics is the study of how societies use scarce resources to produce valuable commodities and distribute them among different people. Economic goods : goods that are scarce or limited in supply. Micro-Economics : concern with the behavior of individual entities such as markets, firms, and households. (Adam Smith - Wealth of Nation) Macro-economics : overall performance of economy. (John Maynard Keynes - 1935) Logic of Economics :
Post hoc fallacy Failure to hold other things constant Fallacy of composition

Fundamental of Economics
3 Problem of economic organization
1. What commodities are produced? 2. How are goods produced? 3. For Whom are the good produced? Positive economics : deals with equation that all can be resolved by references to analysis and empirical evidence. Normative economics : involves ethics precept and norms of fairness.

Market, Command and Mixed Economics

Alternative economics system : Market economics: is one which individuals and private firms make major decisions about production and consumption. Command economics : is one which the government makes all important decisions about production and distribution. Mixed economics : combination of market and command economics.

Societys Technological Possibilities

Inputs are commodities or services that are used to produce goods and services.
Factor of Production : Land : Natural resources Labor : Human resources Capital :

Outputs are the various useful goods or services that result from the production process and are either consumed or employed in further production.

Societys Technological Possibilities

Production-Possibility Frontier

Shifting Boundary Between Markets & Government

Market is mechanism by which buyers and sellers meet to trade and to determine prices and quantities for commodities. Market equilibriums : represents a balance among all the different buyers and sellers. Invisible Hand : in selfishly pursuing only his/her personal good, every individual is led, as if by invisible hand, to achieve the best good for all. Failure of invisible hand : by market failure
Monopolies Imperfect competition

Advanced economy :
Trade Specialization Money Capital

Shifting Boundary Between Markets & Government

Economic role of government
Increase efficiency by promoting competition, curbing externalities, and providing public goods.
Perfect competition : all goods and services have a price and are traded in markets. Imperfect competition : monopoly

Promotes equity by using tax and expenditure programs to redistribute income. Foster macroeconomic stability and growth by fiscal policy and monetary regulation.

Basic Elements of Supply and Demand

Faktor yang mempengaruhi kurva demand : 1. Average Income 2. Population 3. Prices of related goods 4. Tastes 5. Special influences Price

Quantity of demanded
Faktor yang mempengaruhi kurva supply : 1. Technology 2. Input Prices 3. Prices of related goods 4. Government Policy 5. Special influences

Price

Quantity of supplied