2014 MNG 609 Introduction(1)

8/20/2019 2014 MNG 609 Introduction(1)

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Micro Economics[MNG 609]

Trupti Mishra

Shailesh J Mehta School OfManagement

IIT om!a"


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#$ %hat is Economics

&$ E'olution of Economics

($ )e'ie* of Economic Terms

Session Outline


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+eri'e, from oikonomikos - .s/ille, inhousehol, management

+eals *ith ac1uisition2 control an,

,istri!ution of )esources *ithin mem!ersof a societ"

%hat is Economics 333


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Session Outline


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E'olution of Economics 4 5rom earl" a'emanto no*

Tools2 &26002000

5ire2 7902000o* an, arro*2 (02000 %eighing scales2 7000%heel2 (700

8lough2 +#008rinting press2 #:7:

Telescope2 #60;Stoc/ E


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Short @istor" of the Econom"

@unter-gatherer societies No surplus Aer" Bat social structure

Sla'er"

8ermanent agriculture allo*e, for a surplus to e


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Surplus 4 i,ing e'olution ofEconomics

E'er" econom" must pro,uce enough to /eepits participants ali'e2 an, to allo* pro,uction tocontinue ne


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Surplus 4 i,ing e'olution ofEconomics Cont,

Surplus Tra,eKarterE


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Economics 4 E


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ncient Economic thoughts Cristotle28lato2 Socrates

Mi,,les ges

Mercantilists 8h"siocrats Mar/et K apitalist Econom" omman, K Socialist Econom" Mi


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ommon spects Irrespecti'e of T"peof Econom"

%or/ is the source of all 'alue a,,e,2 nomatter *hat the economic s"stem

@umans learn !" ,oing as *e *or/2 *e learnho* to *or/ !etter Ctechnolog"

Social relationships an, the organiHation ofour *or/ change *ith technolog"

E'er" societ" *hich pro,uces a surplus2 must,eci,e *ho gets it2 an, *hat the" ,o *ith it

Nothing in the econom" is permanent ttempts to portra" capitalism as naturalF or

e'er-lastingF are i,eological


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)esources are Scarce L)esources gi'e us the means to pro,uce an,

,istri!ute goo,s an, ser'ices that satisf"

human nee,s an, *ants The *orl, is more or less


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@uman *ants are unlimite, Lontrast to %orl,Ds ph"sical limitation

Scarcit"

Scarcit" 4 foun,ation to EconomicsEconomics is the *a" thin/ing a!out ho*

people in,i'i,uall" an, collecti'el" in 'ariousorganiHationCinclu,ing rms cope *ith

scarcit"$

The Economic )esources


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e" consi,erations in Economics

The /e" economic 1uestions K pro!lems 333 @o* ,o *e ,eci,e *hat to pro,uce Cgi'en

limite, resources

@o* *e pro,uce it Ctechnolog"Kprocess

Our relationships to other people

@o* ,o *e ensure sta!le prices an, fullemplo"ment of our resources3

@o* ,o *e pro'i,e a rising stan,ar, of li'ing

!oth for oursel'es an, for future generations3 Economics is also in constant Bu


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Session Outline


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Economic +ecisions for the 5irm

%hat The pro,uct ,ecision 4 !egin or stop pro'i,ing

goo,s an,Kor ser'ices$

@o* The hiring2 staPng2 procurement2 an, capital

!u,geting ,ecisions$

5or *hom The mar/et segmentation ,ecision 4 targeting

the customers most li/el" to purchase$


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Three 8rocesses

Three processes to ans*er *hat2 ho*2 an,for *homMar/et 8rocess

•use of suppl"2 ,eman,2 an, material incenti'es

omman, 8rocess

• use of go'ernment or central authorit"2 usuall"in,irect

Tra,itional 8rocess• use of customs an, tra,itions


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Mar/etKapitalist Econom"

In a pure mar/et econom" there is no go'ernmentin'ol'ement in economic ,ecisions$

The go'ernment lets the mar/et ans*er the follo*ingthree !asic economic 1uestions$

%hat3 onsumers ,eci,e *hat shoul, !e pro,uce, in amar/et econom" through the purchases the" ma/e$

@o*3 8ro,uction is left entirel" up to !usinesses$ usinessesmust !e competiti'e in such an econom" an, pro,uce 1ualit"pro,ucts at lo*er prices than their competitors$

5or *hom3 In a mar/et econom"2 the people *ho ha'e moremone" are a!le to !u" more goo,s an, ser'ices$

ase, on ,am SmithDs in'isi!le han, principleE


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omman, K Socialist Econom"

In a comman, econom" the go'ernmentans*ers the three !asic economic 1uestions$%hat3 ,ictator or a central planning

committee ,eci,es *hat pro,ucts are nee,e,$

@o*3 Since the go'ernment o*ns all means ofpro,uction in a comman, econom"2 it ,eci,esho* goo,s an, ser'ices *ill !e pro,uce,$

5or *hom3 The go'ernment ,eci,es *ho *ill

get *hat is pro,uce, in a comman, econom"$

5or e$g$ hina2 Me


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Mi


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onfe,eration

ecause of glo!aliHationE

Documents

2014 MNG 609 Introduction(1)