Introduction to Economics DEFINITION Economics a social science

Introduction to Economics

DEFINITION…

Economics: a social science that studies how individuals, governments, firms and nations make choices on allocating scarce resources to satisfy their unlimited wants. The Survival Game

What is Economics all About? https: //www. youtube. com/watch? v=yo. Vc_S_gd _0

All societies face the economic problem of having to decide… 1. What goods and services to produce? 2. How best to produce goods and services? 3. Who is to receive goods and services?

1. What goods and services to produce?

2. How best to produce goods and services? • Best use of land, labour, capital and enterprise? • Replace labour with capital?

3. Who is to receive goods and services? • Who will get expensive hospital treatment and who will not? https: //www. youtube. com/watch? v=b. Uay 9 DV_ _G 0

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. What determines the price of petrol? Why does the petrol price increase from time to time? What are the effects of such increases on individuals, households, businesses, government and society at large? What is money? How is it created? How do changes in the amount of money in the country affect the various participants in the economy (households, businesses, etc)? What are interest rates? Why are they important? Why are interest rates raised or lowered from time to time? How do such changes affect households, businesses and government? What is unemployment? What causes unemployment? What can the government do to reduce unemployment? What is inflation? Does inflation have anything to do with unemployment? Why has the rand often depreciated sharply against the major international currencies such as the US dollar and the euro? What is the difference between capitalism and socialism? And between socialism and communism? Why did communism collapse in Eastern Europe towards the end of the 1980 s? What is nationalisation? How does it differ from privatisation? Why are some goods and services, such as electricity, provided by government-owned institutions while other goods and services are provided by privately owned firms? Why have certain Asian economies expanded so rapidly? Why have African economies not fared equally well? Why is South Africa richer than most other African countries? Why are certain provinces in South Africa so much richer than others? Why are some South Africans richer than others? What are South Africa’s economic prospects? Will the country prosper and be able to provide a better life for all? Or will the economy stagnate or decline?

Scarcity, choice and opportunity cost Resources are limited (unlimited wants and limited means) ∴ choices must be made

Opportunity Cost Resources are scarce – always a cost involved! What is the cost (besides cash) when money is involved? ? ? What is the cost when time is involved? ? ?

Opportunity Cost measured i. t. o. alternatives that they have to sacrifice.

Opportunity cost: the value of the best forgone opportunity. In simple terms – the next best thing that you have to give up to gain something else.

Factors of Production

Production possibilities curve

• OC of producing 40 kg of potatoes = _____. • OC of producing 1 basket of fish = ______.

Production possibilities curve: slope combinations of any twoofgoods Opportunity cost: negative of the curve - more one Choice: Scarcity: mustall choose pointsamong right ofavailable the curve combinations (G) are unattainable. along curve. or services attainable when resources are fully good can be obtained only by sacrificing theemployed. other good.

Shifts and Movements of the PPC