University:
University College London
Course:
LAWS0014 | European Union Law
Academic year:

2024
Views:

277

Pages:

3
Author:

Nada

Introduction to Economics Economics = social science focusing on studying the choice problems faced by individuals. → Goal of economics = satisfying needs. Choice problems for students: → allocation of time for studying/leisure time Choice problems for households: → allocation of budget for purchases/saving Choice problems for business leaders: → investing/hiring/layoffs Better understanding of global issues: • determining the standard of living of a country • international cooperation • some countries lagging behind in economic development Economic problem Needs are manifold: • primary • secondary • tertiary Choice problem = utilizing given resources to achieve maximum need satisfaction. Resources are scarce and useful. Manifold needs create tension between individual and collective needs of society and the availability of scarce resources. Need: • diverse • material & immaterial • individual & collective • variation in priority & intensity • individual needs are given → moral value Scarcity of resources: • economic goods • utility = satisfying needs wholly or partly • conditions of scarcity and utility speak for economic goods • Price is paid. Non-scarce goods: • free goods • emerging scarcities Choice problem: • enjoyable job, nice house, fancy car → limited budget = every euro spent once • companies invest in training/machines • government invests in education, culture Consumer's choice problem: • subjective & changeable • economic factors - prices - budget • non-economic factors - sociological - psychological Producer's choice problem: • revenues = selling price * quantity • costs = production factors * compensation Production factors: L (labor), K (capital), N (raw materials) Production function: • relationship between input & output • short-term & long-term Opportunity costs = actual cost of the chosen alternative = value of the best alternative → example: choosing to study for an extra year instead of working Management of scarce resources Scitovsky = social science that deals with the management of scarce resources 3 types of problems: • allocation of resources • distribution problem • stabilization problem What & how much: which products to produce & how much How: which combination of production factors L, K & raw materials Where: location of production For whom: benefits of production Business economics Definition = study of economic activities within a company • enterprises • government-owned companies Profit motive: incoming cash flows > outgoing cash flows Non-profit: government services Production: • conversion of production factors • creation of added value • industry, trade, transport Consumption: → use of economic goods for non-productive purposes Business column Company → generates added value Total added value = price paid by the consumer Types of goods: • excludable • partially excludable • non-excludable Economic sectors: • primary (agriculture) • secondary (industry) • tertiary (services) • quaternary (defense) Microeconomics = allocation & distribution problem → behavior of individuals = consumers, companies → example: studying consumer behavior