Professional Documents
Culture Documents
(ECO 162)
INTRODUCTION TO
MICROECONOMICS
HISTORY ON DEFINITION OF
ECONOMICS
i. Economics is a science that studies human behavior as a relationship
between ends and scarce means which have alternative uses
L.Robbins (1894-1984) .
ii. Economics is a study of how people use their limited resources to try to
fulfill their unlimited wants and involves alternative or choices K.E.
Case and R.C. Fair.
iii. Economics is the science of how a particular society solves its
economic problems Milton Friedman (1912)
iv. Economics is the study of mans actions in the ordinary business of
life; it examines that part of individual and social action which is most
closely connected with the attainment and with the use of the material
requisites of well-being. Thus it is on one side a study of wealth and on
the other and more important side, a part of the study of man - Alfred
Marshall (1824-1924)
DEFINITION OF ECONOMICS
Economics is a social science study which
concern on how human being allocates the
limited resources in order to fulfill the unlimited
needs and demands.
Economic can be subdivided into two branch;
macroeconomic and microeconomic.
Microeconomic analyzes the specific economic
units in details such as households, firms and
government.
Macroeconomics, on the other hand, analyzes
the aggregate behavior of the entire economy.
MICROECONOMICS
VS MACROECONOMICS
What shou
we or ld I
ld buy for lun
hou rice ch?
S ce ? Price of su
u
od car gar
pr increase!
A
15
0
B Y
12
0
C
90
X
60
D
30
Good Y
B
75
A
50
50 100 Good X
PRODUCTION POSSIBILITIES
CURVE
v. Shifts of the PPC
a) Outward shift (Increase in output): Due to improvement in
the new technology, increase in resources and technology,
economy growth and increase in population.
b) Inward Shift (Decrease in output) : Due to natural disaster,
reduction in factors of production and
Good Y
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