1102 Macro economics Binder1to 5.pdf - Post Graduate...

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Post Graduate Diploma In Business (Online Student)
Module No. DB - 1102 Macroeconomic Environment
Chapter -1 The Scope and Method of Economics
Daw Khin Mar Kyi Lecturer Departmen of Economics Yangon University of Distance Education
The Scope and Method of Economics Economics is the study of how individuals and societies choose to use the scarce resource that nature and previous generations have provided. Economics is a behavioral, or social science. In large measure, it is the study of how people make choices. The choices that people make, when added up, translate into societal choices.
The Economic Problem Unlimited Wants Scarce Resources – Land, Labour, Capital Resource Use Choices
Why Study Economics? There are many reasons to study economics, including (a) to learn a way of thinking, (b) to understand society, (c) to understand global affairs, and (d) to be an informed citizen
(a) To learn a way of thinking The best alternative that we forgo when we make a choice or a decision is the opportunity cost of that decision. Opportunity costs arise because resources are scarce. Opportunity Cost: People must decide how to divide their incomes among all the goods and services available in the marketplace. They must decide whether to work, whether to go to school, and how much to save. Businesses must decide what to produce, how much to produce, how much to charge, and where to locate.
(a) To learn a way of thinking A second key concept used in analyzing choices is the notion of marginalism. Marginalism: The process of analyzing the additional or incremental costs or benefits arising from a choice or decision. Sunk costs that cannot be avoided because they have already been incurred. Efficient market (No free lunch): A market in which profit opportunities are eliminated almost instantaneously.
(b) To understand society Economic decisions not only have shaped the physical environment but also have determined the character of society. The current state of the physical environment, the level of material well-being, and the nature and number of jobs are all products of the economic system. Industrial Revolution : The period in England during the late eighteenth and early nineteenth centuries in which new manufacturing technologies and improved transportation gave rise to the modern factory system and a massive movement of the population from the countryside to the cities.
(c) To understand global affairs The discovery in 2010 of major new diamond deposits in Zimbabwe has implications for the future stability of Mugabe’s government, with implications for developments in the rest of the region.
(d) To be an informed citizen Economics is also essential in understanding a range of other everyday government decisions at the local and federal levels. Why do governments pay for public schools and roads, but not cell phones?

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