Lecture 1 Introduction and Key Principles

Lecture 1 Introduction and Key Principles - Lecture 1...

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Lecture 1 Introduction and Key Principles EC1101E Introduction to Economic Analysis 1
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Lecture Outline 1. What is economics? 2. Concepts of scarcity and choice. 3. The market and the meaning of the invisible hand. 4. Positive economics versus normative economics. 5. Microeconomics versus macroeconomics. 6. The economic way of thinking. 7. Principle of opportunity cost. 8. Production possibilities curve and the concept of scarcity and opportunity cost. 2
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Lecture Outline 9. Marginal benefit and marginal cost, and marginal principle. 10. Principle of diminishing. 11. Real-nominal principle. 12. Principle of voluntary exchange. 13. Gains from specialization and exchange. 14. Virtues and shortcomings of markets. 15. Role of the government in a market economy. 3
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What is Economics? Basically, it is a way of thinking . The objective of this course is to help you to learn some key economic principles and apply them to a host of economic questions and policy issues, i.e., to come away thinking like an economist . Questions : What is the best size for an introductory economics class? What is the constraint of providing smaller classes? Why can’t the government spend more on tertiary education? Why are there trade-offs? 4
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Typical Total Cost at Local Public University per Year 5 * Permanent Residents pay an additional 10% and International Students an additional 50%. Faculties/Schools Citizens* Full Fee ($) Tuition Grant ($) Direct Payment ($) Arts/Social Sciences 25,360 6,360 Business 25,540 6,540 Building/Real Estate 25,360 19,000 6,360 Law 26,340 7,340 Computing Architecture Engineering 32,760 26,400 6,360 Science Music 55,580 47,700 7,880 Dentistry/Medicine 106,430 88,200 18,230
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Scarcity Scarcity is a situation in which resources are limited in quantity and can be used in different ways. Our wants exceed the resources available to satisfy them. Questions: What is scarce in your life? Could you have everything that you wanted even if you had all of the money that you wanted? Is it possible to buy time? 6
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Scarcity is a fundamental fact of life. Therefore we have to make choices . We cannot have it all. There are trade-offs . Examples include: You have only 24 hours in a day. If you play computer games for an hour, you have an hour less for sports, study, or sleep. Singapore is a land-scarce country. If we devote more land to building expressways, there is less left for housing, industry, or recreational areas. If a nation decides to have more full-time soldiers, it would necessarily have fewer manpower in our manufacturing and services sectors. 7
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Lecture 1 Introduction and Key Principles - Lecture 1...

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