Lecture notes

Lecture notes Microeconomics (EC1008) Economics taugh in all English universities

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Module
Microeconomics (EC1008)

Institution
City University (City)

Book
Economics

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Uploaded on September 8, 2023
Number of pages 340
Written in 2022/2023
Type Lecture notes
Professor(s) Claudia jefferies
Contains All classes

economics
micro
city uni
ec1008
sample exam
practice
lecture
microeconomics
solution
coursework
questions
answers
city university

27/09/2014

EC1008 Introduction to

Microeconomics

Introduction to Microeconomics
• Textbook: John Sloman, Economics, 8th edition
• Lecturer: Dr. Claudia Jefferies
• Claudia’s office: D329
• Claudia’s e- mail address:

WHAT IS ECONOMICS?
• The study of how we deal with scarcity!
• Scarcity principle – having more of one good
thing usually means having less of another
• Every choice is a trade-off
• Resources are limited and wants are unlimited!
• What resources?

1

, 27/09/2014

Factors of Production
• Land and natural resources
• Labor
• Capital
• These are inputs into the production process.

CHOICES/TRADE-OFFS
• As individuals, households and society we
have to make tough choices

– What?
– How?
– How much?
– For Whom?

WHAT IS ECONOMICS?
• It is the study of human behaviour when
confronted with scarcity of resources
• What is the best way for society to manage its
scarce resources?
• Subject is often split into
• Microeconomics: Concerned with individual
parts of the economy – consumers, firms in
particular markets
• Macroeconomics: Concerned with the economy
as a whole

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, 27/09/2014

What do Economists Study?
• Macroeconomic issues
– growth

– unemployment

– inflation

– balance of payments problems

– cyclical fluctuations

What do Economists Study?
• Microeconomic issues
– choices: what, how and for whom
– the concept of opportunity cost
– rational economic decision making
• marginal costs and marginal benefits
• MC > MB  do more
• MC > MB  do less
– microeconomic objectives
• efficiency
• equity

MAKING CHOICES
• What is the best way of making these decisions
for individuals, households and society?
• Economics tries to find answers to the previous
question by comparing the benefits and the
costs.
• It sounds so simple but it may not be that
simple.
• When economists say cost, they mean
opportunity cost .
• Focus on marginal benefits and costs

3

, 27/09/2014

OPPORTUNITY COST

• Easy to define, but often it is surprisingly
difficult to apply.

• Value of the next best alternative that must be
forgone.

OPPORTUNITY COST

Forgone benefit is a cost
of the decision
(the “good thing you give
up)

Decision

Forgone costs is a benefit
(the ‘bad’ thing you avoid)

Some Key Ideas
• Don’t ignore the implicit costs – no actual
transfer of money
• Think at the margin – don’t focus on the
average
• Ignore sunk costs – very counter-intuitive
• Rational Choice: Weighing up marginal costs
and marginal benefits before making a decision.

4

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