EKN 110 and 120 Notes

Part 1: Introduction 1.

What

economics is all about? eywords:  K eywords: y

y

 Economics  It is the art of making the most out of life.  The origin of the word economics is Greek.  K eywords: eywords: describe, explain, analyse and predict. Wants

 Human

y

 Need s

 Things

y

y

y

desire for goods and services

that are essential for survival

 Demand   Having necessary purchasing power to buy goods and services. Opportunity Opportunity cost   The value of the forgone opportunity.  S carcity

 Limited

y

ositive  P ositiv

y

 N orm ormative

resource in relation to unlimited wants.

st at ement   Any statement that is factual or rather objective. st at ement   Any statement that is an opinion or subjective.

y

 Producti on possibilit  curve/fronti er  ti ll t t  It i

ti PPC

lt t t l t i tC t i tD  There i an oppor t nit cost for maximising the  production of product A over product B. Figure: PPC for Product A & B  X  A 100

B

95 G C 85 Product B D 70

E

40

F 0

1

2

3

4

5

Y 

Product A

 F ormula %¨=

for percentag e chan g e cal culati on

New  Old Old