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Intermediate Microeconomic Theory Overview

This document provides an outline of topics covered in an intermediate microeconomics theory course. It introduces economics and defines it as the study of how scarce resources are allocated to satisfy unlimited human wants. It then discusses the basic economic problem of scarcity and the factors of production. The four basic economic questions are outlined as what to produce, how much to produce, how to produce, and for whom to produce. Positive and normative economics are defined and the two main categories of economics, microeconomics and macroeconomics, are introduced.

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Ivan Marcelo
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14 views16 pages

Intermediate Microeconomic Theory Overview

This document provides an outline of topics covered in an intermediate microeconomics theory course. It introduces economics and defines it as the study of how scarce resources are allocated to satisfy unlimited human wants. It then discusses the basic economic problem of scarcity and the factors of production. The four basic economic questions are outlined as what to produce, how much to produce, how to produce, and for whom to produce. Positive and normative economics are defined and the two main categories of economics, microeconomics and macroeconomics, are introduced.

Uploaded by

Ivan Marcelo
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd

Introduction

AGMGTO 2205: Intermediate Microeconomic Theory


Lecture 1
MARI JOY M. BUENAVISTA, Ph.D.
Outline of Topics
• Definition of Economics
• Foundation of Economic Problem
• Basic Economic Questions
• Positive Economics vs Normative Economics
• Two basic categories of economics
• Macroeconomist vs Microeconomist
• Macroeconomic model
Economics
• It is a social science that deals with the study on
the allocation of scarce resources to satisfy
unlimited human wants.

• Scarcity and alternatives are important


ingredients for a problem to be an economic
problem.
Foundation of Economic Problem

• Foundation of economics
a. Society’s wants is unlimited
b. Resources or factors of production are scarce

• Factors of production
a. Land
b. Labor
c. Capital
d. Entrepreneurial ability
Basic Economic Questions
Questions that should be answered to achieve and
maintain efficiency in the use of scarce resources
• What to produce?
• How much to produce?
• How to produce?
• For whom to produce?
(a) What to produce?
- Do we produce everything in this country? If not, which goods
will we produce here and which goods will we import?

(b)How much to produce?


- Once we have decided what goods to produce, next
question: How much of each good will we produce?

(c)How to produce?
- Suppose we have decided on quantities of goods that will be
produced. next question: what techniques to use in
production?

(d)For whom to produce?


- Who benefits from the goods that were produced?
Positive vs. Normative Economics
• Positive Economics
• Answers the question: “What is?”
• The price of gasoline is Php 42.90/liter.
• The population growth rate is 2.3%.
• 11 million Filipinos live on $1 a day.
• Normative Economics
• Answers the question: “What should be?”
• The price of gasoline should be Php 40.0/liter.
• The population growth rate must only be at 2
%.
• Filipinos ought to live on at least $5 a day.
Categories of Economics
• Microeconomics – the study of a single economic
unit such as the household or the firm.
• Macroeconomics – the study of the operation of
the whole economy.
Features of Microeconomics
END

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