Economic Fundamentals: Methodology, Activity, and Resources
In our second ever blog in our economics masterclass, we will be going over the extremely basic yet important basics of the markets. Today we will be going over Economic Methodology, The Nature and Purpose of Economic Activity and Economic Resources.
Economic methodology
Now Economics is a social science, it seeks to understand how individuals, businesses, and societies make choices and allocate resources to fulfil their needs and wants. As a social science, economics analyses human behaviour and interactions in the context of economic systems. Economists need to make assumptions in their analysis, often relying on the ceteris paribus principle. where it assume that other factors remain constant, allowing economists to build models based on real-life scenarios.
It is also crucial to distinguish between positive and normative statements in economics.
Phew, all the boring stuff done! 😅 Now onto the slightly more interesting stuff
1.2 The nature and purpose of economic activity
In economics there is the golden rule, as humans we have unlimited needs and limited resourced
The purpose of economic activity is to produce goods and services that effectively allocating resources to satisfy consumer needs and wants. which involves using scarce resources (inputs in the form of the factors of production) to produce desired outputs.
Economists face decisions about what to produce, how to produce it efficiently, and who will benefit from the goods and services produced. Careful consideration is given to factors such as opportunity cost, distribution, costs, and productivity to ensure optimal decision-making, all of which we will go through in the future.
Section 4.1.1.3: Economic Resources
Economic resources encompass the following factors of production:
land, labour, capital, and enterprise.
Capital refers to physical goods used in production, while entrepreneurship (enterprise) involves managerial abilities and taking risks. Land represents natural resources, and labour refers to the workforce. These resources are rewarded through incentives such as interest, profit, rent, and wages. It's important to recognize that the environment itself is a scarce resource, comprising renewable and non-renewable resources. Proper management and sustainable practices are essential to maintain resource availability for future generations.
3 short yet boring lessons, In my opinion the section we are doing now (4.1 Individuals, firms, markets and market failure) is probably the most boring of them all.
Please let me know in the comments how you found my first lesson!
In the next one we will be going through Scarcity, choice and the allocation of resources and Production possibility diagrams, which will be slightly more interesting. I will also show a progress bar at the bottom of our posts.
Happy Trading!
Microeconomics
4.1 Individuals, firms, markets and market failure
4.1.1.1 Economic methodology ✅
4.1.1.2 The nature and purpose of economic activity ✅
4.1.1.3 Economic resources ✅
4.1.1.4 Scarcity, choice and the allocation of resources ⭕
4.1.1.5 Production possibility diagrams ⭕
4.1.2 Individual economic decision making
4.1.2.1 Consumer behaviour ⭕
4.1.2.2 Imperfect information ⭕
4.1.2.3 Aspects of behavioural economic theory ⭕
4.1.2.4 Behavioural economics and economic policy ⭕
4.1.3 Price determination in a competitive market
4.1.3.1 The determinants of the demand for goods and services ⭕
4.1.3.2 Price, income and cross elasticities of demand ⭕
4.1.3.3 The determinants of the supply of goods and service ⭕
4.1.3.4 Price elasticity of supply ⭕
4.1.3.5 The determination of equilibrium market prices ⭕
4.1.3.6 The interrelationship between markets ⭕
4.1.4 Production, costs and revenue
4.1.4.1 Production and productivity ⭕
4.1.4.2 Specialisation, division of labour and exchange ⭕
4.1.4.3 The law of diminishing returns and returns to scale ⭕
4.1.4.4 Costs of production ⭕
4.1.4.5 Economies and diseconomies of scale ⭕
4.1.4.6 Marginal, average and total revenue ⭕
4.1.4.7 Profit ⭕
4.1.4.8 Technological change ⭕
4.1.5 Perfect competition, imperfectly competitive markets and
monopoly
4.1.5.1 Market structures ⭕
4.1.5.2 The objectives of firms ⭕
4.1.5.3 Perfect competition ⭕
4.1.5.4 Monopolistic competition ⭕
4.1.5.5 Oligopoly ⭕
4.1.5.6 Monopoly and monopoly power ⭕
4.1.5.7 Price discrimination ⭕
4.1.5.8 The dynamics of competition and competitive market processes ⭕
4.1.5.8 The dynamics of competition and competitive market processes ⭕
4.1.5.10 Market structure, static efficiency, dynamic efficiency and resource allocation ⭕
4.1.5.11 Consumer and producer surplus ⭕
4.1.6 The labour market
4.1.6.1 The demand for labour, marginal productivity theory ⭕
4.1.6.2 Influences upon the supply of labour to different markets ⭕
4.1.6.3 The determination of relative wage rates and levels of employment in perfectly
competitive labour markets ⭕
4.1.6.4 The determination of relative wage rates and levels of employment in
imperfectly competitive labour markets ⭕
4.1.6.5 The Influence of trade unions in determining wages and levels of employment ⭕
4.1.6.6 The National Minimum Wage ⭕
4.1.6.7 Discrimination in the labour market ⭕
4.1.7 The distribution of income and wealth: poverty and inequality
4.1.7.1 The distribution of income and wealth ⭕
4.1.7.2 The problem of poverty ⭕
4.1.7.3 Government policies to alleviate poverty and to influence the distribution of
income and wealth ⭕
4.1.8 The market mechanism, market failure and government
intervention
4.1.8.1 How markets and prices allocate resources ⭕
4.1.8.2 The meaning of market failure ⭕
4.1.8.3 Public goods, private goods and quasi-public goods ⭕
4.1.8.4 Positive and negative externalities in consumption and production ⭕
4.1.8.5 Merit and demerit goods ⭕
4.1.8.6 Market imperfections ⭕
4.1.8.7 Competition policy ⭕
4.1.8.8 Public ownership, privatization, regulation and deregulation of markets ⭕
4.1.8.9 Government intervention in markets ⭕
4.1.8.10 Government failure ⭕
Macroeconomics
4.2.1 The measurement of macroeconomic performance
4.2.1.1 The objectives of government economic policy ⭕
4.2.1.2 Macroeconomic indicators ⭕
4.2.1.3 Uses of index numbers ⭕
4.2.1.4 Uses of national income data ⭕
4.2.2 How the macroeconomy works: the circular flow of income,
aggregate demand/aggregate supply analysis and related concepts
4.2.2.1 The circular flow of income ⭕
4.2.2.2 Aggregate demand and aggregate supply analysis ⭕
4.2.2.3 The determinants of aggregate demand ⭕
4.2.2.4 Aggregate demand and the level of economic activity ⭕
4.2.2.5 Determinants of short-run aggregate supply ⭕
4.2.2.6 Determinants of long-run aggregate supply ⭕
4.2.3 Economic performance
4.2.3.1 Economic growth and the economic cycle ⭕
4.2.3.2 Employment and unemployment ⭕
4.2.3.3 Inflation and deflation ⭕
4.2.3.4 Possible conflicts between macroeconomic policy objectives ⭕
4.2.4 Financial markets and monetary policy ⭕
4.2.4.1 The structure of financial markets and financial assets ⭕
4.2.4.2 Commercial banks and investment banks ⭕
4.2.4.3 Central banks and monetary policy ⭕
4.2.4.4 The regulation of the financial system ⭕
4.2.5 Fiscal policy and supply-side policies
4.2.5.1 Fiscal policy ⭕
4.2.5.2 Supply-side policies ⭕
4.2.6.1 Globalisation ⭕
4.2.6.2 Trade ⭕
4.2.6.3 The balance of payments ⭕
4.2.6.4 Exchange rate systems ⭕
4.2.6.5 Economic growth and development ⭕
Economic methodology
Now Economics is a social science, it seeks to understand how individuals, businesses, and societies make choices and allocate resources to fulfil their needs and wants. As a social science, economics analyses human behaviour and interactions in the context of economic systems. Economists need to make assumptions in their analysis, often relying on the ceteris paribus principle. where it assume that other factors remain constant, allowing economists to build models based on real-life scenarios.
It is also crucial to distinguish between positive and normative statements in economics.
- Positive statements are objective and can be tested with factual evidence. They are facts and contain words like will or is
- Normative statements are subjective and based on opinions. these judgments can influence economic decision-making and policy, leading to different conclusions from the same data. They often contain words like should, would or could.
Phew, all the boring stuff done! 😅 Now onto the slightly more interesting stuff
1.2 The nature and purpose of economic activity
In economics there is the golden rule, as humans we have unlimited needs and limited resourced
The purpose of economic activity is to produce goods and services that effectively allocating resources to satisfy consumer needs and wants. which involves using scarce resources (inputs in the form of the factors of production) to produce desired outputs.
Economists face decisions about what to produce, how to produce it efficiently, and who will benefit from the goods and services produced. Careful consideration is given to factors such as opportunity cost, distribution, costs, and productivity to ensure optimal decision-making, all of which we will go through in the future.
Section 4.1.1.3: Economic Resources
Economic resources encompass the following factors of production:
land, labour, capital, and enterprise.
Capital refers to physical goods used in production, while entrepreneurship (enterprise) involves managerial abilities and taking risks. Land represents natural resources, and labour refers to the workforce. These resources are rewarded through incentives such as interest, profit, rent, and wages. It's important to recognize that the environment itself is a scarce resource, comprising renewable and non-renewable resources. Proper management and sustainable practices are essential to maintain resource availability for future generations.
3 short yet boring lessons, In my opinion the section we are doing now (4.1 Individuals, firms, markets and market failure) is probably the most boring of them all.
Please let me know in the comments how you found my first lesson!
In the next one we will be going through Scarcity, choice and the allocation of resources and Production possibility diagrams, which will be slightly more interesting. I will also show a progress bar at the bottom of our posts.
Happy Trading!
Microeconomics
4.1 Individuals, firms, markets and market failure
4.1.1.1 Economic methodology ✅
4.1.1.2 The nature and purpose of economic activity ✅
4.1.1.3 Economic resources ✅
4.1.1.4 Scarcity, choice and the allocation of resources ⭕
4.1.1.5 Production possibility diagrams ⭕
4.1.2 Individual economic decision making
4.1.2.1 Consumer behaviour ⭕
4.1.2.2 Imperfect information ⭕
4.1.2.3 Aspects of behavioural economic theory ⭕
4.1.2.4 Behavioural economics and economic policy ⭕
4.1.3 Price determination in a competitive market
4.1.3.1 The determinants of the demand for goods and services ⭕
4.1.3.2 Price, income and cross elasticities of demand ⭕
4.1.3.3 The determinants of the supply of goods and service ⭕
4.1.3.4 Price elasticity of supply ⭕
4.1.3.5 The determination of equilibrium market prices ⭕
4.1.3.6 The interrelationship between markets ⭕
4.1.4 Production, costs and revenue
4.1.4.1 Production and productivity ⭕
4.1.4.2 Specialisation, division of labour and exchange ⭕
4.1.4.3 The law of diminishing returns and returns to scale ⭕
4.1.4.4 Costs of production ⭕
4.1.4.5 Economies and diseconomies of scale ⭕
4.1.4.6 Marginal, average and total revenue ⭕
4.1.4.7 Profit ⭕
4.1.4.8 Technological change ⭕
4.1.5 Perfect competition, imperfectly competitive markets and
monopoly
4.1.5.1 Market structures ⭕
4.1.5.2 The objectives of firms ⭕
4.1.5.3 Perfect competition ⭕
4.1.5.4 Monopolistic competition ⭕
4.1.5.5 Oligopoly ⭕
4.1.5.6 Monopoly and monopoly power ⭕
4.1.5.7 Price discrimination ⭕
4.1.5.8 The dynamics of competition and competitive market processes ⭕
4.1.5.8 The dynamics of competition and competitive market processes ⭕
4.1.5.10 Market structure, static efficiency, dynamic efficiency and resource allocation ⭕
4.1.5.11 Consumer and producer surplus ⭕
4.1.6 The labour market
4.1.6.1 The demand for labour, marginal productivity theory ⭕
4.1.6.2 Influences upon the supply of labour to different markets ⭕
4.1.6.3 The determination of relative wage rates and levels of employment in perfectly
competitive labour markets ⭕
4.1.6.4 The determination of relative wage rates and levels of employment in
imperfectly competitive labour markets ⭕
4.1.6.5 The Influence of trade unions in determining wages and levels of employment ⭕
4.1.6.6 The National Minimum Wage ⭕
4.1.6.7 Discrimination in the labour market ⭕
4.1.7 The distribution of income and wealth: poverty and inequality
4.1.7.1 The distribution of income and wealth ⭕
4.1.7.2 The problem of poverty ⭕
4.1.7.3 Government policies to alleviate poverty and to influence the distribution of
income and wealth ⭕
4.1.8 The market mechanism, market failure and government
intervention
4.1.8.1 How markets and prices allocate resources ⭕
4.1.8.2 The meaning of market failure ⭕
4.1.8.3 Public goods, private goods and quasi-public goods ⭕
4.1.8.4 Positive and negative externalities in consumption and production ⭕
4.1.8.5 Merit and demerit goods ⭕
4.1.8.6 Market imperfections ⭕
4.1.8.7 Competition policy ⭕
4.1.8.8 Public ownership, privatization, regulation and deregulation of markets ⭕
4.1.8.9 Government intervention in markets ⭕
4.1.8.10 Government failure ⭕
Macroeconomics
4.2.1 The measurement of macroeconomic performance
4.2.1.1 The objectives of government economic policy ⭕
4.2.1.2 Macroeconomic indicators ⭕
4.2.1.3 Uses of index numbers ⭕
4.2.1.4 Uses of national income data ⭕
4.2.2 How the macroeconomy works: the circular flow of income,
aggregate demand/aggregate supply analysis and related concepts
4.2.2.1 The circular flow of income ⭕
4.2.2.2 Aggregate demand and aggregate supply analysis ⭕
4.2.2.3 The determinants of aggregate demand ⭕
4.2.2.4 Aggregate demand and the level of economic activity ⭕
4.2.2.5 Determinants of short-run aggregate supply ⭕
4.2.2.6 Determinants of long-run aggregate supply ⭕
4.2.3 Economic performance
4.2.3.1 Economic growth and the economic cycle ⭕
4.2.3.2 Employment and unemployment ⭕
4.2.3.3 Inflation and deflation ⭕
4.2.3.4 Possible conflicts between macroeconomic policy objectives ⭕
4.2.4 Financial markets and monetary policy ⭕
4.2.4.1 The structure of financial markets and financial assets ⭕
4.2.4.2 Commercial banks and investment banks ⭕
4.2.4.3 Central banks and monetary policy ⭕
4.2.4.4 The regulation of the financial system ⭕
4.2.5 Fiscal policy and supply-side policies
4.2.5.1 Fiscal policy ⭕
4.2.5.2 Supply-side policies ⭕
4.2.6.1 Globalisation ⭕
4.2.6.2 Trade ⭕
4.2.6.3 The balance of payments ⭕
4.2.6.4 Exchange rate systems ⭕
4.2.6.5 Economic growth and development ⭕
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