1. INTRODUCTION TO PUBLIC SECTOR & ECONOMICS POLS 4358

2. TOPICS WHAT ARE THE KEY ISSUES ECONOMICS IS CONCERNED WITH? ECONOMIC ANALYSIS & THE PUBLIC SECTOR HOW ECONOMISTS PERCEIVED THE WORLD: THE CIRCULAR MODEL

3. WHAT ARE THE KEY ISSUES ECONOMICS IS CONCERNED WITH? Scarcity management: limitless demands and limited resources limitless demands and limited resources Every society faces three key questions: 1. What is to be produced?  TASTE & PREFERENCE 2. How is it to be produced?  EFFICIENCY 3) Who gets what?  EQUITY

4. WHAT ARE THE KEY ISSUES ECONOMICS IS CONCERNED WITH? Every decision, made either by an individual or society, concerning the previous three questions necessarily implies an opportunity cost An opportunity cost is essentially what you give up of X in order to obtain Y Time Forgone income Resources

5. ECONOMIC ANALYSIS & THE PUBLIC SECTOR Every society must decide how to address the above three questions and make choices. What are the choices? Market driven vs. state allocative policy Recently there exists a debate concerning whether the private sector can deliver more efficiently services that traditionally are governmental functions such as education, trash collection, roads, mail delivery, etc.

6. ECONOMIC ANALYSIS & THE PUBLIC SECTOR The objective of this class, therefore, is to be able to evaluate pros and cons of choices of market (prices) versus state driven allocative mechanisms (taxes & fees). The analysis employed will be positive (cause & effect) rather than normative (value judgment) driven. Microeconomics provides the theoretical tools to analyze the framework of choices.

7. HOW ECONOMIST PERCEIVED THE WORLD: THE CIRCULAR MODEL HOUSEHOLDS BUSINESSES GOODS MARKET FACTOR MARKET PUBLIC SECTOR

8. THE FLOW OF MONEY HOUSEHOLD Income = salary, rent, and interest Business Profits = Total revenue – Total costs Total costs= salary + rent + interest