Economics Lecture Notes

Introduction

• Overview of Economics syllabus for the years 2020, 2021, and 2022.
• Plan to cover half of the syllabus today, focusing on Chapters 1 to 3.
• Emphasis on basic economic problems, scarcity, economic goods, and factors of production.

Chapter 1: Basic Economic Problem

Definition of Economics

• Economics is a social science focusing on production, distribution, and consumption of goods and services.
• Sources: Wikipedia, IGCC definitions are valid.

Resources and Scarcity

• Resources: Inputs needed for the production of goods and services.
• Recurring theme in economics.
• Scarcity: Lack of resources, a core concept in economics.
  • Example: Limited land availability for various constructions.
  • Economics helps in resource allocation.

Economic Agents

• Decision-makers in resource allocation (e.g., government, firms).

Types of Goods

• Economic Goods: Made from scarce resources.
• Free Goods: Abundant in supply (e.g., air, sunlight).

Factors of Production

• Land: Natural resources, limited in supply.
• Labor: Human effort (mental and physical).
• Capital: Man-made resources like machinery.
• Enterprise: The ability to take risks and manage businesses.

Opportunity Cost

• The next best alternative foregone when making a decision.

Production Possibility Curve (PPC)

• Shows maximum combinations of goods that can be produced with available resources.
• Explains efficient and inefficient production levels.

Chapter 2: Allocation of Resources

Microeconomics vs. Macroeconomics

• Microeconomics: Study of individual markets (e.g., effect of price changes).
• Macroeconomics: Study of the entire economy.

Market Roles and Economic Agents

• Resource allocation, economic problem-solving.

Demand and Supply

• Demand: Willingness and ability to purchase goods.
• Supply: Producers' willingness to provide goods.

Elasticity

• Price Elasticity of Demand (PED): Responsiveness of demand to price changes.
• Price Elasticity of Supply (PES): Responsiveness of supply to price changes.

Market Economic System

• Features: All resources allocated by private individuals, little to no government intervention.
• Advantages: Variety of goods, efficiency.
• Disadvantages: Inequality, lack of public goods.

Market Failure

• Occurs when resources are not efficiently allocated.
• Causes: Externalities, immobility of resources, information failure.

Mixed Economic System

• Combines market and government intervention.
• Advantages include provision of public goods and regulation of harmful goods.

Chapter 3: Microeconomic Decision Makers

Money and Banking

• Money: Medium of exchange, measure of value, store of value, means of deferred payment.
• Commercial Banks: Accept deposits, provide loans, financial services.
• Central Banks: Issue currency, manage national debt, regulate monetary policy.

Households

• Consumption, saving, and borrowing behaviors.
• Factors affecting these behaviors: Disposable income, wealth, consumer confidence.

Workers

• Next topic to be covered in subsequent lectures.

Conclusion

• End of current lecture, promised continuation covering remaining chapters.

These notes cover the essentials of the lecture, highlighting definitions, concepts, and examples provided during the session.