Summary

Summary Economics 1A main Concepts

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Course
Economics 1A

Institution
University Of Johannesburg (UJ)

This document serves as a comprehensive guide that aims to provide clarity and deep insights into important economic concepts such as scarcity, GDP, inflation, and economic growth. Whether you are a student, a professional, or simply an individual interested in economics, this document will equip y...

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Uploaded on July 16, 2023
Number of pages 2
Written in 2022/2023
Type Summary

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ECONOMICS
SCARCITY
SCARCITY BASICALLY MEANS THAT WE AS HUMANS HAVE UNLIMITED WANTS, BUT THERE IS
LIMITED RESOURCES AVAILABLE TO SATISFY OUR WANTS

THE GOAL IS TO SATISFY MORE NEEDS WITH LESS RESOURCES (THE OBJECTIVE OF ECONOMICS)

TO MAKE A GOOD CHOICE, THE SACRIFICE/COST OF SOEMTHING SHOULD BE TAKEN NTO ACCOUNT.
EG: SPENDING YOUR WEDDING DAY AT CAMPUS INSEAD OF BEING PRESENT FOR YOUR WEDDING
CEREMONY (TOO HIGH COST) A GOOD CHOICE= SMALLEST OPPORTUNITY COST (SACRIFICE)

TO MAKE A DECISION, COMPARE THE MARGINAL CHANGES. EG, IS THE EXTRA R100 WORTH
SACRIFICING 5 HOURS OF MY LEISURE TIME- THIS IS KNOWN AS MARGINAL THINKING

BAD CHOICES ARE USUALLY MADE WHEN PEOPLE THINK ABOUT WHAT THEY’VE LOST(SUNK COST).
EG, I HAVE TO STAY IN THIS BAD RELATIONSHIP, BECAUSE IVE INVESTED TOO MUCH OF MY TIME
INTO IT. NOTE: SUNK COSTS CANNOT BE RECOVERED, THEREFORE FOCUS ON THE FUTURE AND
WHAT CAN CHANGE THEN.

GOVERNMENY SPENDING= TAXATION

SAVINGS=INVESTMENTS

DO WORKCHAT 3!!

TO CALCULATE THE INFLATION RATE USING CPI
NEW CPI−OLD CPI
INFLATION RATE= ×100
OLD CPI
NOMINAL AMOUNT= INFLATION HAS NOT BEEN TAKEN INTO ACCOUNT

REAL AMOUNT= INFLATION HAS BEEN ACCOUNTED FOR

PRODUCTION METHOD=INCOME METHOD

TO CALCULATE GDP
PRODUCTION METHOD:
STAGE 1 10m (production)
STAGE 2 11m (21m-10m as it has been accounted for)
STAGE 3 16m (balancing figure)
TOTAL GDP 37m (given)

INCOME METHOD
SALARIES 18M (2M+6M+10M)
RENT 6M
INTEREST 2M
PROFIT 11M

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