Contents
Economics for Organisations
Rationale
Economics is a branch of social science that studies the production, distribution , and consumption of goods and services . The term economics comes from the Greek for oikos (house) and nomos (custom or law), hence "rules of the house(hold)." [1]
A definition that captures much of modern economics is that of Lionel Robbins in a 1932 essay : "the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses." [2] Scarcity means that available resources are insufficient to satisfy all wants and needs. Absent scarcity and alternative uses of available resources, there is no economic problem . The subject thus defined involves the study of choices as they are affected by incentives and resources.
Areas of economics may be divided or classified into various types, including microeconomics and macroeconomics positive economics ("what is") and normative economics ("what ought to be") mainstream economics and heterodox economics fields and broader categories within economics. One of the uses of economics is to explain how economies , as economic systems, work and what the relations are between economic players ( agents ) in the larger society. Methods of economic analysis have been increasingly applied to fields that involve people (officials included) making choices in a social context, such as crime, [3] education, [4] the family , health , law , politics , religion, social institutions , and war. [6] |
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- In the beginning
- Basic concepts
- Economic reasoning
- Areas and classifications in economics
- History and schools of economics
- Criticism
- Economics in practice
Learning Outcomes
After completing the programme the student should be able to:
1. Define the problem of scarcity, opportunity cost, the functioning of free market, command and mixed economies and the difference between macroeconomics and microeconomics.
2. Describe and interpret the basic theory of consumer behaviour and demand including the concept of utility, the law of diminishing marginal utility, the distinction between Giffen, inferior and normal goods, the distinction between substitute and complementary goods, the difference between individual and market demand, and the notion and measurement of elasticity (own-price, cross and income elasticity).
3. Employ the theory of supply from a fundamental understanding of costs; define the difference between the short-run and the long-run; differentiate between fixed, sunk and variable costs; derive marginal, average and total costs; understand the nature and relevance of economies and diseconomies of scale and the concept of elasticity of supply.
4. Describe the application of supply and demand analysis to the working of markets both in equilibrium and disequilibrium, including examination of the effects of price restrictions, quotas, subsidies and taxation.
5. Examine the effect of different markets’ structures (perfect competition, monopoly, monopolistic competition and oligopoly) upon the conduct (particularly pricing policy) and performance of profit maximising and non-profit maximising (sales revenue, market share and managerial utility maximising) business organisations, and give examples of the forms and effects of government intervention in this area.
6. Understand how exchange rates are determined, the main alternative exchange rate regimes and their advantages and disadvantages. Explain the rationale for international trade agreements and organisations (e.g. the World Trade Organisation), tariffs, quotas and other measures of trade protectionism.
7. Evaluate national income as a measure of societal well being and derive it through its various methods of measurement. Explain the main components of National Income Accounts (Consumption, Investment, Government Expenditure and Foreign Trade.)
8. Explain the determination of the equilibrium levels of national income in terms of the simple Keynesian macroeconomic model.
9. Describe the functions of money and the role of the banking system in the creation of money. Explain the relationship between the money supply, growth and inflation.
10. Understand and interpret the main objectives of government macroeconomic policy and the rationale for the various policies used to achieve these objectives. Employ the aggregate supply and demand model to analyse the likely effects of fiscal and monetary policy upon output, employment, the price level, and the balance of payments.
11. Explain the fundamental principles of comparative advantages and specialisation and their relevance to international trade. Explain the terms of trade, balance of trade and balance of payments accounts.
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Teaching and Learning Resources
Our task here is to gain some understanding of
what
"economics" is about. Contrary to what many people
think, it is not primarily about money or business,
although such matters do become involved in the
subject. Much more fundamentally, economics involves
studying the ways human societies have been organized
to deal with the simple fact that human wants exceed
the means of satisfying all of them.
The
big question in economics is how we can organize
our use of scarce resources to satisfy the most
urgent and important of our wants. We will
identify two simple theoretical models which offer
a solution - one involving political (group) decision-making,
the other relying on the spontaneous interaction
of buyers and sellers in markets. As we will see,
applying these models in real- world situations
is never easy, especially when we try to implement
hybrid systems combining elements of both!
Learning Objectives
1. To understand the basic relationships between resource scarcity, the scarcity of want-satisfying goods and services, and why we have to establish some system to determine how scarce resources can be allocated among alternative uses. In particular, the concept of production possibilities must be clearly understood, along with its implications for how the relative costs or values of different goods are established.
2. To establish that there are alternative systems by which such resource allocation functions may be performed, one of which is the system of "market economy". The distinction between "markets" and a "market economy" is particularly important.
3. To fit the evolution of alternative systems of allocation into a historical framework. The important point to be made here is that economic theory, economic history, and economic policy issues are all interrelated and not easily reduced to simple technical principles. Indeed, you may want to begin thinking about whether we will ever have a theory of economic behaviour that is "valid" for all places and times. Was the Russian novelist Zemyatin right when he said, "Today's truth becomes tomorrow's error?"
Economics and Economy. The Tools of Economic Analysis. Demand, Supply and Market
Tutorials
| Basics |  |
| Introduction | |
| Analytical Tools | |
| Demand, Supply and Market | |
Government in the Mixed Economy. The effect of price and income on demand quantities
Tutorials
| Government | |
| Price and Income Effects on Demand Quantities | |
| The Theory of Consumer Choice | |
Business Organization and Behaviour. Developing the theory of supply: Costs and production. Perfect competition and monopoly: The limiting cases of market structure
Tutorials
| Business Organization and Behaviour | |
| Costs and production | |
| Perfect Competition and Monopoly. | |
Market Structure and Imperfect Competition. The Information Economy
Tutorials
| Imperfect Competition | |
| The Information Economy | |
The Analysis of Factor Markets: Labour. Human Capital, Discrimination and Trade Unions. Capital and Land: Completing the Analysis of Factor Markets. Coping with Risk in Economic Life
Tutorials
| The Analysis of Factor Markets: Labour | |
| Human Capital | |
| Capital and Land | |
| Coping with Risk in Economic Life | |
Introduction to Welfare Economics. Taxes and Government Spending. Industrial Policy and Competition Policy. Privatization and Regulation
Tutorials
| Introduction to Welfare Economics | |
| Taxes and Government Spending | |
| Industrial Policy and Competition Policy | |
| Privatization and Regulation | |
Introduction to Macroeconomics and National Income Accounting. The Determination of National Income. Aggregate Demand, Fiscal Policy, and Foreign Trade. Money and Modern Banking. Central Banking and the Monetary System
Tutorials
Aggregate Supply, the Price Level, and the Speed of Adjustment. Unemployment. Inflation
Tutorials
| Aggregate Supply, the Price Level, and the Speed of Adjustment | |
| Unemployment | |
| Inflation | |
Open Economy Macroeconomics. Economic Growth. The Business Cycle. Macroeconomics: Where do we stand? International Trade and Commercial Policy
Tutorials
| Open Economy Macroeconomics | |
| Economic Growth | |
| The Business Cycle | |
| Macroeconomics: Where do we stand? | |
| International Trade and Commercial Policy | |
The International Monetary System. European Integration. Problems of developing countries
Tutorials
| The International Monetary System | |
| European Integration | |
| Problems of Developing Countries | |
Recommended Text
 |
Economics,David Begg, Stanley Fischer and Rudiger Dornbusch, 6th Edition, McGraw-Hill Check the availability and buy your books from our Bookshop. |
Resources
- Internet Resources: Economics, China
- Internet Reference Guide to China, Taiwan & Macau
- China's Growing Economy
- AmosWorld
- "Dismal" Science .com
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Welcome to the Biz/Ed / Institute for Fiscal Studies (IFS) Virtual Economy. This has been produced with the generous support of a grant from the Nuffield Foundation. At the heart of the Virtual Economy are sophisticated computer models which are very similar to those the Chancellor and his advisers use to prepare the Budget and to keep the economy on track.
The
model is based around No.11 Downing St.
- the Chancellor's house and office. On
each floor, you'll find various rooms with
a wide variety of resources. Just click
on the room you want.
