Welcome Introduction to Economics @ EFA 3 Prof. Dr. Peter Schmidt Introduction/Review Principles of Economics, Microeconomics

What‘s it about ? What do you know? What do you expect? WHY study Economics ? What‘s it about ? What do you know? What do you expect?

Business Environment

Introductions . . . Economics Lecturer Students

Module Description: Learning Outcomes

Module Description: Contents

market . research . culture Peter Schmidt Who am I Economics & Statistics market . research . culture 1 1

You are highly motivated students  have to carry your individual workload:

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I want YOU … to make this YOUR class Assume responsibility for your – and all our Learning Outcomes Help me make the class better E c o n o m i c s

How do we learn ?… Listening Watching Writing Thinking … interactive (team) work? NAME SIGNS please -> after each class (incl. lunch break): 3 most important things I learned today (up to 3) questions Students are selcted at random at the beginning of the next class

Assessment:

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Whatsta-gram Face-Snap-App ee-Mail I tube, you tube food in class But please NO Whatsta-gram Face-Snap-App ee-Mail I tube, you tube food in class But ( drinks are ok) NAME SIGNS please

(10) Principles of Economics

Every field of study has its own terminology Mathematics axioms integrals vector spaces Psychology ego id cognitive dissonance Law torts venues Promissory estoppel

Every field of study has its own terminology Economics Opportunity cost Elasticity Supply Consumer Surplus Comparative advantage Deadweight loss Demand

Economics trains you to. . . . Think in terms of alternatives. Evaluate the cost of individual and social choices. Examine and understand how certain events and issues are related. 2

The Economist as a Scientist The economic way of thinking . . . Involves thinking analytically and objectively. Makes use of the scientific method. 3

Observation, Theory and More Observation! The Scientific Method Uses abstract models to help explain how a complex, real world operates. Develops theories, collects, and analyzes data to prove (or dismiss) the theories. Observation, Theory and More Observation! 4

Ten Principles of Economics Chapter 1 Copyright © 2001 by Harcourt, Inc. All rights reserved.   Requests for permission to make copies of any part of the work should be mailed to: Permissions Department, Harcourt College Publishers, 6277 Sea Harbor Drive, Orlando, Florida 32887-6777.

A household and an economy face many decisions: Who will work? What goods and how many of them should be produced? What resources should be used in production? At what price should the goods be sold?

Society and Scarce Resources: The management of society’s resources is important because resources are scarce.

Scarcity . . . . . . means that society has limited resources and therefore cannot produce all the goods and services people wish to have.

Economics is the study of how society manages its scarce resources.

“There is no such thing as a free lunch!” 1. People face tradeoffs. “There is no such thing as a free lunch!”

Economists study. . . I. How people make decisions. (principle 1-4) II. How people interact with each other. (principle 5-7) III. The forces and trends that affect the economy as a whole. (principle 8-10)

Ten Principles of Economics I How People Make Decisions People face tradeoffs. The cost of something is what you give up to get it. Rational people think at the margin. People respond to incentives. II How People Interact Trade can make everyone better off. Markets are usually a good way to organize economic activity. Governments can sometimes improve market outcomes. III How the Economy as a Whole Works The standard of living depends on a country’s production. Prices rise when the government prints too much money. Society faces a short-run tradeoff between inflation and unemployment. 7

Ten Principles of Economics I How People Make Decisions People face tradeoffs. The cost of something is what you give up to get it. Rational people think at the margin. People respond to incentives. 7

Ten Principles of Economics II How People Interact Trade can make everyone better off. Markets are usually a good way to organize economic activity. Governments can sometimes improve economic outcomes. 7

Ten Principles of Economics III How the Economy as a Whole Works The standard of living depends on a country’s production. Prices rise when the government prints too much money. Society faces a short-run tradeoff between inflation and unemployment. 7