Bab 1 UVERS MAK A – Manajemen & Akutansj
CHAPTER 1
THE
FUNDAMENTALS OF
ECONOMICS
BY: YENNY SULASTRI, S.E.,M.M
1
WHY STUDY
ECONOMICS?
With a study of economics, we can be
fully informed about international
trade etc.
Choosing your life’s occupation is the
most important economic decision you
will make, because your future
depends not only on your own abilities
but also on how economic forces
beyond your control affect your wages.
2
DEFINITION OF
ECONOMICS
The study of how society chooses to
allocate its scarce resources to the
production of goods and services in
order to satisfy unlimited wants.
The study of how societies use scarce
resources to produce valuable
commodities and distribute them
among different people.
3
2 KEY IDEAS IN
ECONOMICS:
That goods are scarce
That society must use its
resources efficiently
4
EFEKTIF VS EFISIEN
Efektif: pencapaian tujuan/target dalam batas waktu
yang sudah ditetapkan tanpa sama sekali
memperdulikan biaya yang sudah dikeluarkan.
Efisien: pencapaian target dengan menggunakan input
(biaya) yang sama untuk menghasilkan output (hasil)
yang lebih besar.
Efektivitas adalah tingkatan sejauh mana tujuan
tercapai dan sejauh mana sasaran masalah dapat
diselesaikan. Berbeda dengan efisiensi, efektivitas
ditentukan tanpa mengacu pada biaya. Efektivitas =
“Doing the right thing” sedangkan Efisiensi = “Doing
the thing right”
5
BASIC CONCEPTS:
Scarcity the fundamental
economic problem that human
wants exceed the availability of
time, goods, and resources.
•
Choice – Because individuals
and society can never have
everything they desire, they
therefore are forced to make
choices
6
MICROECONOMICS VS.
MACROECONOMICS
Microeconomics
The branch of
economics that
studies the
behavior and
decisionmaking by
a single individual,
household, firm,
industry, or level of
government
Macroeconomics
The branch of
economics that
studies decision
making for the
economy as a
whole
7
MICROECONOMICS VS.
MACROECONOMICS
Microeconomics:
How individual prices are set,
studied the determination of prices of land, labor
and capital and inquired into the strengths and
weaknesses of the market mechanism.
Macroeconomics:
How total investment and
consumption are determined, how central banks
manage money and interest rates, what causes
international financial crisis and why some
nations grow rapidly while others stagnate.
8
3 FUNDAMENTAL QUESTIONS OF
ECONOMIC ORGANIZATION
What: What commodities are produced and in what
quantities?
How: How are goods produced? A society must
determine who will do the production, with what
resources, and what production techniques they will
use. Will factories be run by people or robots? The
HOW question requires society to decide the
resource mix used to produce goods.
Whom: For whom are goods produced? It concerns
the division of output among society’s citizens.
9
VIDEO WHAT, HOW, FOR WHOM
10
POSITIVE ECONOMICS VS NORMATIVE
ECONOMICS
Positive economics: describes the facts of an
economy. Ex: why do doctors earn more than
janitors? Does free trade raise or lower the wages of
most Americans? What is the impact of computers
on productivity? analysis & empirical evidence.
Normative economics: Involves ethical precepts and
norms of fairness. Should poor people be required
to work if they are to get government assistance?
Should the US break up Microsoft because it has
violated the antitrust laws? There are no right or
wrong answers to these questions because they
involve ethics and values rather than facts.
They can be resolved only by political debate and
decisions, not by economic analysis alone.
11
MARKET, COMMAND AND MIXED
ECONOMIES
A Market Economy is one in which individuals and
private firms make the major decisions about
production and consumption. A system of prices, of
markets, of profits and losses, of incentives and
rewards determines what, how and for whom. Ex:
USA
Firm: produce the commodities that yield the highest
profits (the what) by the techniques of production that
are least costly (the how).
Consumption: determined by individuals’ decisions
about how to spend the wages and property incomes
generated by their labor and property ownership (the
for whom).
12
MARKET, COMMAND AND MIXED
ECONOMIES
A Command Economy is one in which the
government makes all important decisions
about production and distribution : Uni
soviet where the government owns most of
the means of production (land and capital)
and it also owns and directs the operations of
enterprises in most industries; it decides how
the output of the society is to be divided
among different goods and services.
Mixed
Economy with elements of market
and command. Ex: Indonesia
13
VIDEO SISTEM EKONOMI
14
INPUTS & OUTPUTS
Inputs:
commodities or services that
are used to produce goods and services.
Ex: eggs, flour, heat, pizza oven, chef’s
skilled labor.
Outputs:
the various useful goods or
services that result from the
production process and are either
consumed or employed in further
production. Ex: Pizza.
15
FACTORS OF PRODUCTION
Land: natural resources – represents the gift of
nature to our productive processes. It consists of the
land used for farming or for underpinning houses,
factories and roads; the energy resources that fuel our
cars and heat our homes; and the nonenergy
resources like copper and iron ore and sand.
clean air and drinkable water
Labour: The mental and physical capacity of workers
to produce goods and services
Capital: The physical plants, machinery, and
equipment used to produce other goods (Financial
capital The money used to purchase capital)
Entrepreneurs: The creative ability of individuals to
seek profits by combining resources to produce
innovative products
16
Land
Land
Labor
Labor
Capital
Capital
Entrepreneurship
organizes
Entrepreneurship organizes
resources
to
produce
goods
resources to produce goods
and
services
and services
17
VIDEO FACTORS OF
PRODUCTION
18
PRODUCTION
POSSIBILITIES CURVE:
A curve that shows the
maximum combinations
of two outputs that an
economy can produce,
given
its
available
resources and technology
19
PRODUCTION
POSSIBILITIES CURVE:
Ex: Defense Spending.
Countries must decide how much
of their limited resources goes to
their military and how much
goes into other activities (such
as new factories or education).
The more output that goes for
defense, the less there is
available for consumption and
20
ALTERNATIVE PRODUCTION
POSSIBILITIES
Possibilities
A
Butter
Millions of Pounds
0
Guns
(thousands)
15
B
1
14
C
2
12
D
3
9
E
4
5
F
5
0
21
22
23
Military Goods
Production Possibilities Curve
A
Efficient
Unattainable
Inefficient
B
Consumer Goods
24
PROBLEMS
As a student , you might have 10 hours to study
for upcoming tests in both economics and history.
If you study only history, you will get a high grade
there and do poorly in economics, and vice versa.
Treating the grades on the two tests as the
“output” of your studying, sketch out the PPF for
grades, given your limited time resources.
Alternatively, if the two student commodities are
“grades” and “fun”, how would you draw this PPF?
Where are you on this frontier? Where are your
lazy friends?
25
OPPORTUNITY COSTS
Life is full of choices: Resources are
scarce, we must always consider how
to spend our limited incomes or time.
In a world of scarcity, choosing one
thing means giving up something
else. The opportunity cost of a
decision is the value of the good or
service forgone.
26
VIDEO OPPORTUNITY COSTS
27
EFFICIENCY
Productive efficiency occurs when an
economy cannot produce more of one
good without producing less of
another good; this implies that the
economy is on its production
possibility frontier.
28
THE
FUNDAMENTALS OF
ECONOMICS
BY: YENNY SULASTRI, S.E.,M.M
1
WHY STUDY
ECONOMICS?
With a study of economics, we can be
fully informed about international
trade etc.
Choosing your life’s occupation is the
most important economic decision you
will make, because your future
depends not only on your own abilities
but also on how economic forces
beyond your control affect your wages.
2
DEFINITION OF
ECONOMICS
The study of how society chooses to
allocate its scarce resources to the
production of goods and services in
order to satisfy unlimited wants.
The study of how societies use scarce
resources to produce valuable
commodities and distribute them
among different people.
3
2 KEY IDEAS IN
ECONOMICS:
That goods are scarce
That society must use its
resources efficiently
4
EFEKTIF VS EFISIEN
Efektif: pencapaian tujuan/target dalam batas waktu
yang sudah ditetapkan tanpa sama sekali
memperdulikan biaya yang sudah dikeluarkan.
Efisien: pencapaian target dengan menggunakan input
(biaya) yang sama untuk menghasilkan output (hasil)
yang lebih besar.
Efektivitas adalah tingkatan sejauh mana tujuan
tercapai dan sejauh mana sasaran masalah dapat
diselesaikan. Berbeda dengan efisiensi, efektivitas
ditentukan tanpa mengacu pada biaya. Efektivitas =
“Doing the right thing” sedangkan Efisiensi = “Doing
the thing right”
5
BASIC CONCEPTS:
Scarcity the fundamental
economic problem that human
wants exceed the availability of
time, goods, and resources.
•
Choice – Because individuals
and society can never have
everything they desire, they
therefore are forced to make
choices
6
MICROECONOMICS VS.
MACROECONOMICS
Microeconomics
The branch of
economics that
studies the
behavior and
decisionmaking by
a single individual,
household, firm,
industry, or level of
government
Macroeconomics
The branch of
economics that
studies decision
making for the
economy as a
whole
7
MICROECONOMICS VS.
MACROECONOMICS
Microeconomics:
How individual prices are set,
studied the determination of prices of land, labor
and capital and inquired into the strengths and
weaknesses of the market mechanism.
Macroeconomics:
How total investment and
consumption are determined, how central banks
manage money and interest rates, what causes
international financial crisis and why some
nations grow rapidly while others stagnate.
8
3 FUNDAMENTAL QUESTIONS OF
ECONOMIC ORGANIZATION
What: What commodities are produced and in what
quantities?
How: How are goods produced? A society must
determine who will do the production, with what
resources, and what production techniques they will
use. Will factories be run by people or robots? The
HOW question requires society to decide the
resource mix used to produce goods.
Whom: For whom are goods produced? It concerns
the division of output among society’s citizens.
9
VIDEO WHAT, HOW, FOR WHOM
10
POSITIVE ECONOMICS VS NORMATIVE
ECONOMICS
Positive economics: describes the facts of an
economy. Ex: why do doctors earn more than
janitors? Does free trade raise or lower the wages of
most Americans? What is the impact of computers
on productivity? analysis & empirical evidence.
Normative economics: Involves ethical precepts and
norms of fairness. Should poor people be required
to work if they are to get government assistance?
Should the US break up Microsoft because it has
violated the antitrust laws? There are no right or
wrong answers to these questions because they
involve ethics and values rather than facts.
They can be resolved only by political debate and
decisions, not by economic analysis alone.
11
MARKET, COMMAND AND MIXED
ECONOMIES
A Market Economy is one in which individuals and
private firms make the major decisions about
production and consumption. A system of prices, of
markets, of profits and losses, of incentives and
rewards determines what, how and for whom. Ex:
USA
Firm: produce the commodities that yield the highest
profits (the what) by the techniques of production that
are least costly (the how).
Consumption: determined by individuals’ decisions
about how to spend the wages and property incomes
generated by their labor and property ownership (the
for whom).
12
MARKET, COMMAND AND MIXED
ECONOMIES
A Command Economy is one in which the
government makes all important decisions
about production and distribution : Uni
soviet where the government owns most of
the means of production (land and capital)
and it also owns and directs the operations of
enterprises in most industries; it decides how
the output of the society is to be divided
among different goods and services.
Mixed
Economy with elements of market
and command. Ex: Indonesia
13
VIDEO SISTEM EKONOMI
14
INPUTS & OUTPUTS
Inputs:
commodities or services that
are used to produce goods and services.
Ex: eggs, flour, heat, pizza oven, chef’s
skilled labor.
Outputs:
the various useful goods or
services that result from the
production process and are either
consumed or employed in further
production. Ex: Pizza.
15
FACTORS OF PRODUCTION
Land: natural resources – represents the gift of
nature to our productive processes. It consists of the
land used for farming or for underpinning houses,
factories and roads; the energy resources that fuel our
cars and heat our homes; and the nonenergy
resources like copper and iron ore and sand.
clean air and drinkable water
Labour: The mental and physical capacity of workers
to produce goods and services
Capital: The physical plants, machinery, and
equipment used to produce other goods (Financial
capital The money used to purchase capital)
Entrepreneurs: The creative ability of individuals to
seek profits by combining resources to produce
innovative products
16
Land
Land
Labor
Labor
Capital
Capital
Entrepreneurship
organizes
Entrepreneurship organizes
resources
to
produce
goods
resources to produce goods
and
services
and services
17
VIDEO FACTORS OF
PRODUCTION
18
PRODUCTION
POSSIBILITIES CURVE:
A curve that shows the
maximum combinations
of two outputs that an
economy can produce,
given
its
available
resources and technology
19
PRODUCTION
POSSIBILITIES CURVE:
Ex: Defense Spending.
Countries must decide how much
of their limited resources goes to
their military and how much
goes into other activities (such
as new factories or education).
The more output that goes for
defense, the less there is
available for consumption and
20
ALTERNATIVE PRODUCTION
POSSIBILITIES
Possibilities
A
Butter
Millions of Pounds
0
Guns
(thousands)
15
B
1
14
C
2
12
D
3
9
E
4
5
F
5
0
21
22
23
Military Goods
Production Possibilities Curve
A
Efficient
Unattainable
Inefficient
B
Consumer Goods
24
PROBLEMS
As a student , you might have 10 hours to study
for upcoming tests in both economics and history.
If you study only history, you will get a high grade
there and do poorly in economics, and vice versa.
Treating the grades on the two tests as the
“output” of your studying, sketch out the PPF for
grades, given your limited time resources.
Alternatively, if the two student commodities are
“grades” and “fun”, how would you draw this PPF?
Where are you on this frontier? Where are your
lazy friends?
25
OPPORTUNITY COSTS
Life is full of choices: Resources are
scarce, we must always consider how
to spend our limited incomes or time.
In a world of scarcity, choosing one
thing means giving up something
else. The opportunity cost of a
decision is the value of the good or
service forgone.
26
VIDEO OPPORTUNITY COSTS
27
EFFICIENCY
Productive efficiency occurs when an
economy cannot produce more of one
good without producing less of
another good; this implies that the
economy is on its production
possibility frontier.
28