WAMMM

ECONOMICS

• - Classified as social science because it deals with the study of human’s life and how he lives with other men.

• A social science concerned chiefly with description and analysis of the production, distribution, and consumption of goods and services.

how the social sciences overlap

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APPLIED ECONOMICS

• - The study of economics in relation to real world situations

• - Application of economic principles and theories to real situations

• and trying to predict what the outcomes may be.

• Study of observing how theories work in practice.

IMPORTANCE OF APPLIED ECONOMICS

• - Mechanism to determine what steps can reasonably be taken to improve current economic situation

• - Powerful tool to reveal the true and complete situation in order to come up with things to do

• Teach valuable lessons on how to avoid the recurrence of a negative situation or at least minimize the impact.

MICROECONOMICS

• - Examines small economic units

• - Examines small economic units - The components of the economy

• focuses on how decisions are made by individuals and firms and the consequences of those decisions.

• Example: How much it would cost for a university or college to offer a net course - the cost of the instructor's salary, the classroom facilities, the class materials, and so on. Having determined the cost, the school can then decide whether or not to offer the course by weighing the costs and benefits.

• - Example: individual, households, firms, industries

MACROECONOMICS

• - Looks at aggregates

• - examines the aggregate behavior of the economy lie. how the actions of all the individuals and firms in the economy interact to produce a particular level of economic performance as a whole).

• Example: Overall level of prices in the economy (how high or how low they are relative to prices last year) rather than the price of a particular good or service.

MICRO/MACRO

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THE LAW OF DEMAND

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THE LAW OF SUPPLY

• - The higher the price, the larger the quantity produced.

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THE FOUR BASIC LAWS OF SUPPLY AND DEMAND:

• If demand increases and supply remains unchanged, a shortage will result, leading to a higher equilibrium price.

• If demand decreases and supply remains unchanged, a surplus will result, thus leads to a lower equilibrium price.

• If demand remains unchanged and supply increases, a surplus will result, leading to a lower equilibrium price.

• If demand remains unchanged and supply decreases, a shortage will result, leading to a higher equilibrium price.