![Page 1: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/1.jpg)
Principles of Economics
By. Amir Alagab A.Gadir GC University
By A
mir A
.A.G
AD
IR . Int. C
apacity Building
Trainer
Cell phone +249 908580182
e-mail : [email protected]
Next
![Page 2: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/2.jpg)
Where this Word “Economics’’ come from?
By A
mir A
.A.G
AD
IR . Int. C
apacity Building
Trainer
Next
The term economics comes from the Ancient Greek “oikonomia” which
means "management of a household, administration.
Oik
House
O
CV
nomia
Management
![Page 3: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/3.jpg)
What is Economics?B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
Next
ProductsService
DistributionConsumption
![Page 4: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/4.jpg)
Economics – Definitions
Economics is the study of how
scarce resources are allocated
among unlimited wants.
Adam Smith
The branch of social science that deals with the production and
distribution and consumption of goods and services and their
management. Wikipedia
Economics is the study of how society manages its scarce resources. N.G. Mankiw
By A
mir A
.A.G
AD
IR . Int. C
apacity Building
Trainer
![Page 5: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/5.jpg)
To understand this definition, we must examine the concepts of scarcity, economic choice,
and rational self-interest.
By A
mir A
.A.G
AD
IR . Int. C
apacity Building
Trainer
Next
Concepts
![Page 6: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/6.jpg)
By A
mir A
.A.G
AD
IR . Int. C
apacity Building
Trainer
Next
Human Nature and Reality
•People have unlimited wants.
•People have limited resources to acquire the things they want.
•As a result, they must make choices.
•Choices involve pursuing some things while forgoing others.
![Page 7: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/7.jpg)
7B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer Scarcity, Goods and Bads
• An item that costs something is called scarce. – Anything with a price on it is called an
economic good—these include goods and services.
– A free good is a good for which there is no scarcity.
• An economic bad is anything you want to get rid of (pollution, disease, garbage)
![Page 8: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/8.jpg)
8B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
Goods • Economic Goods: Its not found by nature and to
obtain it you need to specific limit of resources to get it
• Free Goods: its naturally available in a big quantities and no efforts pied to obtain it, e.g oxygen ”air “ and water sometimes.
• Necessary Goods, which satisfy the human biological needs e.g food, water , clothing and shelter.
• Luxurious Goods: Most people believe to obtain it its urgent.
as we see its not easy to differentiate between the necessity goods and luxurious one.
![Page 9: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/9.jpg)
• Ordinary Goods: it’s the goods that it’s demand increases when the individual income increases vice-versa.
• Inferior Goods: its satisfying human needs in a low quality and when the income increase will move to better quality
• Perishable –Vanishing- Goods: the goods that looses its satisfying power after one time use e.g food stuffs.
• Durable Goods: the goods which satisfy the needs several times and lose its satisfaction gradually e.g clothes, equipment
![Page 10: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/10.jpg)
• Complementary Goods: it’s the goods that can not satisfy the need separately unless we use other goods with it , e.g Tea and sugar . Car and fuel.
• Substitute Goods: it’s the goods that one can substitute other one to satisfy certain need, e.g Tea vs Coffee – Meats vs fish.
• Consumer Goods: It’s the goods that prepared for final consumption with any transforming process. E.g cloth, food.
• Capital Goods: It’s the goods that can’t used directly to satisfy the needs unless transformed, e.g Tools
![Page 11: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/11.jpg)
9B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer Clarifying Concepts
• Scarcity means that not enough is available for free.
• A shortage occurs when not enough is available at the current price. A shortage is a problem of price.
• Poverty occurs when the goods are scarce, and those who need them do not have the income to obtain them. Poverty is a problem of income.
![Page 12: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/12.jpg)
Flow of Income
Spending
Goods andservicesbought
Revenue
Goodsand services
sold
Labor, land,
and capital
Income
Factors ofproduction
Wages, rent,and profit
FIRMS•Produce and sell
goods and services•Hire and use factorsof production
•Buy and consumegoods and services
•Own and sell factorsof production
HOUSEHOLDS
•Households sell•Firms buy
MARKETSFOR
FACTORS OF PRODUCTION
•Firms sell
•Households buy
MARKETS
FOR
GOODS AND SERVICES
= Flow of inputs and outputs
= Flow of INCOME
![Page 13: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/13.jpg)
10B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
Goods to Produce Goods
• Resources are the elements needed to produce goods. Resources are also called – factors of production
– inputs
• They are:– Land (includes natural resources)
– Labor (physical and intellectual services of people)
– Capital (plant, machinery, equipment used in production)
![Page 14: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/14.jpg)
11B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
Next
Resource Suppliers
land
labor
capital
rent
wages
interest
Producers of Goods
![Page 15: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/15.jpg)
12B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer Scarcity and Choice
• Scarcity necessitates making choices.
Economics is the study of how people choose to use their resources in attempts to satisfy their unlimited wants.
![Page 16: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/16.jpg)
13B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
Rational Self-Interest
• Economists believe that people choose options that give them the greatest satisfaction.
• This means that people:– use all available time and information,
– weigh the costs and benefits of all available alternatives,
– and choose the alternative that they believe will bring them the most benefit at the lowest cost. This is the alternative that they believe will bring them the most satisfaction.
• This does not mean that people are innately selfish. Self-interest is not greed.
![Page 17: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/17.jpg)
14B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
Next
Decision
• People weigh the costs and benefits of various alternatives, choosing the alternative that makes them best off.– This behavior is called “economic decision
making”.
• Costs and benefits are sometimes referred to as negative and positive incentives. Hence incentives matter.
![Page 18: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/18.jpg)
15B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
Next
Positive vs. Normative Economics
• Positive Economics– Focuses on “what is”.
– Analyzes actual, measurable outcomes.
– Does not impose value judgments, person feelings or convictions.
– Positive economics is economics as a science.
• Normative Economics– Focuses on what someone thinks “ought to
be” or “should be”.
– Makes ethical judgments—value judgments.
![Page 19: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/19.jpg)
Economics
16B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
![Page 20: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/20.jpg)
17B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
Micro vs. Macro
• Microeconomics– Studies the economy at the level of individual
consumers, workers, firms, goods, and markets
• Macroeconomics– Studies the economy at the aggregate level, at
the level of the economy as a whole.
– Examines total consumer behavior, total employment, total production, total sales, etc.
![Page 21: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/21.jpg)
18B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
End of Lecturer One
![Page 22: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/22.jpg)
Lecture 2
SUPPLY AND DEMAND I: HOW MARKETS WORK
The Market Forces of Supply and Demand
![Page 23: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/23.jpg)
19B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
Next
The Economic Problem is the Problem of
1. [Scarcity ]
Here we mean the Proportional Scarcity not the Absolute Scarcity ,resources are available but due to the increasing needs for it ,thus resources become scarce for its needs.
![Page 24: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/24.jpg)
20B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
Next
– The management of society’s resources is important because resources are scarce.
Society and Scarce Resources:
- Scarcity. . . means that society has limited resources and therefore cannot produce all the goods and services people wish to have.
![Page 25: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/25.jpg)
21B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
Next
2- A Problem of Choice
• Decisions require comparing costs and benefits of alternatives.– Whether to go to college or to work?– Whether to study or go out on a date?– Whether to buy a Laptop Computer or to buy
Digital Camera ?
The opportunity cost of an item is what you give up to obtain that item.
![Page 26: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/26.jpg)
22B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
• How people make decisions.– People face tradeoffs.– The cost of something is what you give up to get it.– Rational people think at the margin.– People respond to incentives.
![Page 27: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/27.jpg)
To Solve this problem
• To solve economical problem we should basically answer the questions face the commuinty which are :
![Page 28: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/28.jpg)
23B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
1. What we Produce ? What type of goods and services we produce is it food , clothes or tools . 2. How we Produce ? Here we need to specify the technique we use in production of these goods. 3. To Whom we produce ? The distribution technique by which production delivered within the community and specifying consumers .
![Page 29: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/29.jpg)
Lecture 2
SUPPLY AND DEMAND I: HOW MARKETS WORK
Graphs and Their Meaning
Price ofIce-Cream Cone
2.50
2.00
1.50
1.00
0.50
$3.00
1. A decrease in price ...
0 1 2 3 4 5 6 7 8 9 10 11 Quantity ofIce-Cream Cones
12
2. ... increases quantity of cones demanded.
![Page 30: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/30.jpg)
24B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
Graphs are employed to help students visualize and understand important economic relationship. Graphs are a means by which ecnomists express their theories .
Definition Graph: What is it ?
![Page 31: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/31.jpg)
25B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
Next
Graph Construction
It's a rpresentation of relationship between to variables. Graph is consist of Horizontal line called X Axis and Vertical line called Y Axis
The Original Point is the point where two lines meet usually equal Zero.
![Page 32: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/32.jpg)
26
By A
mir A
.A.G
AD
IR . Int. C
apacity Building
Trainer
Y Axis
X Axis
Original Point
![Page 33: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/33.jpg)
27B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
Next
Graph Determining
Factors
Determining Factor , Represents on horizontal axis { X Axis }. Dependent Factor, Represents on vertical axis { Y Axis }. Representing the independent variable on the horizontal axis and dependent variable on the vertical axis
![Page 34: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/34.jpg)
28B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
Next
Direct Relationship
Example. 1.
Table.1 Total No of Cars { Y }
Petrol Consumption per million Ltr.{ X }
400 30 A
800 60 B
1200 90 C
1600 120 D
200 150 E
![Page 35: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/35.jpg)
28B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
Next
Direct Relationship
Example. 1.
Table.1
30 60 90 120 150
400
800
1200
1600
200
Y Axis
Cars T
otal N
o
petrol Consumption per million Ltr.
X Axis
![Page 36: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/36.jpg)
Two sets of data which are positively or directly related = Graph as an upsloping line.
31B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
![Page 37: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/37.jpg)
28B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
Next
Inverse Relationship
Example. 2.
Table.2 Q P
2 25 A
4 20 B
6 15 C
8 10 D
10 5 E
![Page 38: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/38.jpg)
28B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
Next
Consier table 2 which shows the realtionship between the demand of chicken and its price per kg .
Inverse Relationship
we observe a negative or inverse reationship between chicken demanded quantity and its price these 2 variables change in opposite direction.
![Page 39: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/39.jpg)
28B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
Next
Inverse Relationship
Example. 2.
Table.2
2 4 6 8 10
10
15
20
25
Y Axis
Price p
er 100 gk
Chicken Demanded Quantity.
X Axis
![Page 40: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/40.jpg)
We find that an inverse relationship will always graph as a downsloping line .
31B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
![Page 41: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/41.jpg)
Any Questions?
By A
mir A
.A.G
AD
IR . Int. C
apacity Building
Trainer
Next
![Page 42: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/42.jpg)
Thank You!
By A
mir A
.A.G
AD
IR . Int. C
apacity Building
Trainer
Next
![Page 43: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/43.jpg)
18B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
End of Lecturer 2
![Page 44: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/44.jpg)
Lecture 4
SUPPLY AND DEMAND I: HOW MARKETS WORK
The Market Forces of Supply and Demand
![Page 45: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/45.jpg)
Definition
Market is an institution or a mechanism which brings together Buyers " Demanders" and Sellers " Suppliers" of a particular goods and services.
What is market?
![Page 46: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/46.jpg)
Factors Determine Market
• The number of Sellers and consumers
• Number of Producers and Sellers.
• The degree of homogeneity .
• Types & nature of the product.
• Link and communication between sellers and buyers.
![Page 47: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/47.jpg)
Types of Markets
1. Perfect Competition: In this market there are 4 main factors :
# Numerous buyers and sellers:
Here the firm is a price taker so that each has no influence over price
![Page 48: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/48.jpg)
# Product are the same" Homogeneous":
Hers the products are similar enabling easy substituting one another. e.g. hair cutting service.
# Freedom entry and exit :
This market has no restriction or barriers facing a new firm to enter this market.
Types of Markets
![Page 49: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/49.jpg)
# Information and access to the data:
The competitors must have an easy way to get the required information about how this market work and operate.
Types of Markets
![Page 50: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/50.jpg)
Types of Markets
2. Monopoly :
One seller and seller controls market .
3. Monopolistic Competition :
- Many Sellers .
- Slight difference in the products .
-Each seller may set a price for its product . e.g Mobilehone network service
![Page 51: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/51.jpg)
Types of Markets
4. Oligopoly :
Few sellers or producers.
No aggressive competition .
e.g Sugar manufacturing .
![Page 52: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/52.jpg)
Any Questions?
By A
mir A
.A.G
AD
IR . Int. C
apacity Building
Trainer
Next
![Page 53: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/53.jpg)
Thank You!
By A
mir A
.A.G
AD
IR . Int. C
apacity Building
Trainer
Next
![Page 54: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/54.jpg)
18B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
End of Lecturer 3
![Page 55: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/55.jpg)
Lecture 4
Supply , Demand and Equilibrium I
![Page 56: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/56.jpg)
SUPPLY , DEMAND and Equilibrium I
• Supply and demand are the two words that economists use most often.
• Supply and demand are the forces that make market economies work.
• Modern microeconomics is about supply, demand, and market equilibrium.
![Page 57: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/57.jpg)
Demand
Quantity demanded is the amount of a good that buyers are willing and able to purchase in different market price levels.
What is demand?
![Page 58: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/58.jpg)
Demand
There are many factors which affect the demand the quantities that consumers willing to buy at a certain time and certain level of price such as:
Factors Determine Demand
![Page 59: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/59.jpg)
Demand
1.Nmber of Buyers
2. Consumer Income
3. Testes
4. Prices of related goods
5. Consumer expectations
Factors Determine Demand
![Page 60: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/60.jpg)
DemandLaw of Demand
The law of demand states that, other things equal, the quantity demanded of a good falls when the price of the good rises.
The demand curve slopes downward because, ceteris paribus, lower prices
imply a greater quantity demanded!
![Page 61: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/61.jpg)
DemandDemand Schedule
• Demand Schedule – The demand schedule is a table that
shows the relationship between the price of the good and the quantity demanded.
![Page 62: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/62.jpg)
DemandDemand Schedule
Point Price/kg/Sdg Quantity / week
A 300 10
B 350 8
C 400 6
D 450 4
E 500 2
F 550 0
![Page 63: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/63.jpg)
DemandDemand Curve
The demand curve is a graph of the relationship between the price of a good and the quantity demanded. (DD – Sloping top to down backward )
![Page 64: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/64.jpg)
Demand Curve
SDG550
500
450
400
350
300
21 3 4 5 6 7 8 9 10
12
11
Price of Chicken
Quantity of Chicken
0
![Page 65: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/65.jpg)
DemandChange in Demand and Quantity
demanded
The quantity which consumers are willing and able to buy rely on other factors e.g.
![Page 66: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/66.jpg)
DemandDemand Curve
1.Nmber of Buyers
2. Consumer Income
3. Testes
4. Prices of related goods
5. Consumer expectations
![Page 67: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/67.jpg)
DemandChange in Consumer
Income
If the income increased in concern the buy ability will increase for ordinary goods, the demand cure will move to right
![Page 68: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/68.jpg)
Consumer IncomeNormal Good
SDG3.00
2.50
2.001.501.00
0.50
21 3 4 5 6 7 8 9 10
12
11
Price of Ice-Cream
Quantity of Ice-Cream
0
Increasein demand
An increase
in income...
D1
D2
Demand
![Page 69: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/69.jpg)
Consumer IncomeInferior Good
Sdg3.00
2.50
2.001.501.00
0.50
21 3 4 5 6 7 8 9 10
12
11
Price of Ice-Cream
Quantity of Ice-Cream
0
Decreasein demand
An increase
in income...
D1D2
Demand
![Page 70: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/70.jpg)
Demand
When a fall in the price of one good reduces the demand for another good, the two goods are called substitutes e.g (Coca Cola v Pepsi ).
When a fall in the price of one good increases the demand for another good, the two goods are called complements e.g ( Petrol v Cars ).
Change in Prices of Related GoodsSubstitutes & Complements
![Page 71: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/71.jpg)
0
D 1
Price of Toyota Cars.
Quantity of Hyundai Cars
Raises the price of Toyota Cars results in an increase in demand
for Hyundai cars.
8
1000
$2000
4
Changes in Quantity Demanded- Substitutes
12
D 2
![Page 72: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/72.jpg)
Any Questions?
By A
mir A
.A.G
AD
IR . Int. C
apacity Building
Trainer
Next
![Page 73: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/73.jpg)
18B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
End of Lecturer 4
![Page 74: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/74.jpg)
Demand Function:
Qd = f ( P , Pn , I, N… )
Qd : Quantity demanded
P: Price
Pn: Other goods price
I: Consumer Income
N: Number of consumers or Population
![Page 75: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/75.jpg)
• Demand for a good or service can be defined for an individual household, or for a group of households that make up a market.
• Market demand is the sum of all the quantities of a good or service demanded per period by all the households buying in the market for that good or service.
From Household to Market
Demand
![Page 76: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/76.jpg)
From Household Demand to Market Demand
• Assuming there are only two households in the market, market demand is derived as follows:
![Page 77: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/77.jpg)
Lecture 5
Supply , Demand and Equilibrium I
Demand
![Page 78: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/78.jpg)
SupplyWhat is supply?
SupplySupply is the number of units of a is the number of units of a product / Service that a firm would be product / Service that a firm would be willing and able to offer for sale at a willing and able to offer for sale at a particular price during a given time particular price during a given time period.period.
![Page 79: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/79.jpg)
SupplySupply Schedule
A A supply schedulesupply schedule is a table is a table showing how much of a product firms showing how much of a product firms will supply at different prices.will supply at different prices.
![Page 80: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/80.jpg)
SupplySupply Schedule
Point Price/ton/Sdg Quantity / Annuel
A 2 0
B 1.75 10
C 2.25 20
D 3 30
E 4 45
F 5 45
Wheat flour Production
![Page 81: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/81.jpg)
• The law of supply states that there is a positive relationship between price and quantity of a good supplied.
• This means that supply curves typically have a positive slope.
The Law of Supply
![Page 82: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/82.jpg)
0
1
2
3
4
5
6
0 10 20 30 40 50Millions ton of Wheat
produced per year
Pri
ce o
f w
hea
t p
er t
on
(sd
g)
The Law of Supply
![Page 83: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/83.jpg)
Supply Curve
• A A supply curvesupply curve is a graph illustrating how much is a graph illustrating how much of a product a firm will supply at different prices.of a product a firm will supply at different prices.
S
S
A
D
C
200
B
250
50
300
60
350
70
400
80
![Page 84: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/84.jpg)
• Productivity (Improvements in machines and production processes of a good or service)
• Inputs ( Change in the price of inputs required to produce the good or service.)
• Government Actions (Subsidies` Financial Asisst. Taxes &Regulations)
• Technology (Improvements in machines and production processes of a good or service)
• Outputs ( Price changes in other products produced by the firm)
• Expectations (outlook of future prices and profits)• Size of Industry (Number of firms in the industry)
Determinants of Supply
![Page 85: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/85.jpg)
A Change in Supply Versus a Change in Quantity Supplied
• A change in A change in supplysupply is is not the same as a not the same as a change in change in quantity quantity suppliedsupplied..
• In this example, a higher In this example, a higher price causes price causes higher higher quantity suppliedquantity supplied, and , and a a move alongmove along the the demand curve.demand curve.
• In this example, changes in determinants of supply, other In this example, changes in determinants of supply, other than price, cause an than price, cause an increase in supplyincrease in supply, or a , or a shiftshift of the of the entire supply curve, from entire supply curve, from SSAA to to SSBB..
sB
![Page 86: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/86.jpg)
From Individual Supplyto Market Supply
• The supply of a good or service can be defined for an individual firm, or for a group of firms that make up a market or an industry.
• Market supply is the sum of all the quantities of a good or service supplied per period by all the firms selling in the market for that good or service.
![Page 87: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/87.jpg)
Market Supply
• As with market demand, market supply is the horizontal summation of individual firms’ supply curves.
![Page 88: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/88.jpg)
Any Questions?
By A
mir A
.A.G
AD
IR . Int. C
apacity Building
Trainer
Next
![Page 89: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/89.jpg)
Thank You!
By A
mir A
.A.G
AD
IR . Int. C
apacity Building
Trainer
Next
![Page 90: C:\Documents And Settings\Control\My Documents\Principles Of Economics By Amir Alagab](https://reader035.vdocuments.us/reader035/viewer/2022062613/54453e6dafaf9f28098b45a7/html5/thumbnails/90.jpg)
18B
y Am
ir A.A
.GA
DIR
. Int. Capacity B
uilding T
rainer
End of Lecturer 5