Concise yet Inclusive summary notes that elaborate on 1st year Microeconomics concepts. These notes cover all topics in ECS1501 and aid in preparation for assignments and exams. These notes are easy-to-read and appealing to study from. Topics covered in these notes include Economic Systems, PPC, C...
Microeconomics IA – First Year
Inclusive Summary Notes
Topic 1 – The Study Field of Economics
The main economic problem– Scarcity
What is scarcity ? – There are unlimited wants and needs, but there
are limited resources.
There are 3 Fundamental Questions in Economics :
➢ What to produce ?
➢ How to produce ?
➢ For whom to produce ?
The 4 factors of production and their remuneration :
➢ Natural Resources – Rent
➢ Human Resources – Salaries and Wages
➢ Capital – Interest
➢ Entrepreneurship – Profit
In economics , Capital is referred to all man-made resources, that are
used in the for the production of other goods and services, e.g.,
Equipment, buildings, vehicles etc. As opposed to its definition in
accounting, Capital in economics does not refer to money/cash.
Opportunity Cost – The value to the decision maker of the best
alternative that is given up. Ask these questions to determine your
opportunity cost :
➢ How much does it cost ?
➢ What did you have to give up in order to do this ?
➢ Traditional
➢ Command (Centrally planned system)
➢ Market (free market)
➢ Mixed (Most of the world’s economies are mixed)
Property rights
- Full ownership has to have all basic rights :
➢ The right to dispose/sell property
➢ The right to use property as owner desires
➢ The right to receive income made from property
- Partial ownership has to have only 0ne or two of the above-
mentioned rights of full ownership .
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