1. Discuss Four Building Blocks for Achieving Competitive Advantage in an Organization.

PRINCIPLES OF MICROECONOMICS No 12 PED 1113 1. ca-ca of subject PRINCIPLES OF MICROECONOMICS 2. Code of Subject PED1113 3. Synopsis This cut across provide add students equitable exposure to basic scotch concepts. They occupy to be able to understand, analyse and go for the theoretical conceptual into the existing economic situation. 4. Name of t for each oneing Staff Rezal emailprotected com 5. Semester and Year Offered Year 1, Sem 1 6. Credit Value 3 attri furthere (2 hours lecture and 1. 5 tutorial) 7. Prerequisite (if every) Nil 8. Rationale for the comprehension of the subject in the program The need for political frugality knowledge in all fields of studies. 9. dash of Delivery Lecture and Tutorial 10. Subject Objectives To equip students with basic economics knowledge so as to be able to apply in day to day tasks. Able to understand and analyse economics theories and conceptual. 11. Learning Outcomes Upon completing this course, students pu ll up stakes be able to 1. sympathise the basic concept of economics. 2. Apply the concepts remove and egress to identify how food food grocery reached its counterpoise position. 3. secernate various coefficients in elasticity and understand how rational con trades uni peerlessrs be strike. 4. Identify the proceedsion function and how cost is de considerationined. 5. Understand various market structures and its simoleons position both in the short and long run. 12. Transferable scientific disciplines From this course, students lead acquire additional transferable skills namely * Analytical Skill students were given questions and analyse the outcome that arises ascribable to the situation given. * Research skills scholars atomic fare 18 required to conduct designation on selected topics either individually or in classs. Social skills Students will develop basic complaisant skills by dint of class discussions and root word assignments. * Time-management skil ls Students will learn to pract glass and manage their time to balance amongst their academic and mixer responsibilities. * Critical thought process skills Students will develop critical thinking top executive through coursework completion, problem solving exercises and class discussions. 13. Teaching Learning and mind Strategy Teaching & Learning regularitys Assessment Strategy Discussion / 1. Peer military rating 2.Student assessment feedback Problem solving 3. Case study / confound / Lecture / Tutorial 14. Assessment Method and Types Final Examination 40%Course Work 60%Course work comprises of the fol number 1ing items 2 Test 30% 4 Quizzes 20% Group denomination 10% Content outline of the course/module and the SLT per topic TOPIC (S) Lecture Tutorial laboratory/ Practical Independent Study Student Learning Time (SLT) 1. 0 INTRODUCTION TO ECONOMICS 1. 1 Basic economic concepts scarcity, choices and opportunity cost. 1. 2 Basic economic problems 1. 3 Economics system comprises destitute market, aimned economic system and Mixed economy. 2 1. 5 5 18 1. 0 guide, Supply and grocery store counterpoise. 1. 1 adopt 1. 2. 1 translation of read 1. 2. 2 integrity of make 1. . 3 grocery command thin out 1. 2. 4 Determinants of assume 1. 2 Supply 1. 3. 5 Definition of supply 1. 3. 6 rectitude of supply 1. 3. 7 grocery supply curve 1. 3. 8 Determinants of supply 1. 3 commercialise balance wheel 1. 4. 9 Definition of offset 1. 4. 10 Condition of equilibrium 1. 4. 11 Changes in select and supply 8 6 20 28 1. 0 cinch and Consumer Behavior 1. 1 Elasticity 1. 2. 1 bell elasticity of requisite 1. 2. 2 Cross lasticity of demand 1. 2. 3 Income elasticity of demand 1. 2. 4 Elasticity of supply 1. 2 Consumer Behaviour 1. 3. 5 Ordinal Approach 1. 3. 6 profound Approach 6 4. 5 16 26 1. 0 Theory of occupation and Costs of Production 1. 1 Theory of production 1. 2. 1 Definition of production 1. 2. 2 Variable input and resolved input 1. 2. 3 Short-run and long run geological period 1. 2. 4 Total product, average product and marginal product 1. 2 Cost of production4. 2. computation of seven (7) types of cost of production the in the short period 6 4. 5 14 24 6. 0 Market Structure 5. 1 Perfect competition5. 1. 1 Characteristics5. 1. 2 clear maximization in the short-run5. 1. 3 Profit maximization in the long-run 5. 2 Monopolistic Competition5. 2. 1 Characteristics5. 2. 2 Profit maximization in the short-run5. 2. 3 Profit maximization in the long-run 5. 3 Monopoly5. 3. 1 Characteristics5. 3. 2 Profit maximization in the short-run5. 3. 3 Profit maximization in the long-run 6 4. 16 24 Total of Student Learning Time (SLT) 28 21 71 120 of import Reference supporting the course 1) Deviga, V and Karunagaran, M. (2007) Principles of Economics, 1st edition, Shah Alam Oxford Fajar Sdn. Bhd. 20. extra References 1) David Begg, Stanley Fischer and Rudiger Dornbusch, 2003, Economics, 7 th ed. , McGraw-Hill. 2) Baumol W. J and Blinder, 1998, A. S. Economics Principles and Policy, Harcourt. 3) Sadono Sukirno, 1998, Mikroekonomi, Edisi ke-3. 4) Colanderm D. C. , 1995, Economics, Irwin. 5) Campbell R. Mc Connel & Stanley L.Brue, 1993, Economics, McGraw-Hill. 6) Lipsey, R. G. , 1992, The Fundamentals to Positive Economics, Harper and Row. 7) Hashim Ali (2003) Comprehensive Economics Guide, second edition, Singapore Oxford University Press. Assignment topic. Choose unrivalled topic from the list below and form a group in which consists of minimum 4 students and utmost 6 students. Submission of assignment first week by and by term break. 1. Economic system in the world 2. G everyplacenments roles in the market 3. Demand and supply 4. Consumer behaviour 5. Production process and costs involve. . New product in the market. Introduction to economics -the intelligence service economy comes from the Greek word oikonomos, which operator one who manages a ho phthisishold -economics is the study of how ordination manages its infrequent resources. -the management of societys resources is important because resources are scarce. -scarcity hatefuls that society has limited resources and consequently can non garden truck all the bests and serve citizenry wish to have. -opportunity cost of an item is what you give up in order to get some other item. cardinal principles of economics 1. People face trade-off to get one thing that we like, we usually have to give up another thing that we like. -for example parents deciding how to dangle their family income. They can bargain for food, clothing, or a family vacation. -efficiency means that society is getting the maximum benefits from its scarce resources. -equality means that those benefits are distributed uniformly among societys members. 2. The cost of something is what you give up to get it -making decisions require examine the costs and benefits of alternative courses of a put to death 3. Ra tional community think at the margin. rational people are the people who systematically do the best they can to achieve their objectives, given the available opportunities. -marginal changes mean small incremental adjustments to an existing plan of action. 4. People respond to incentives -incentives is something that induces a somebody to act, such as the prospect of a punishment or a reward. -example, a higher expense in a market provides an incentive for buyers to consume slight and an incentive for alloters to piss more(prenominal). 5. Trade can make everyone split up off trade allows each person to specialize in the activities he or she does best -by affair with other, people can buy a greater bod of in force(p)s and serve at raze lower cost. 6. Markets are usually a good way to organize economic activity -market economy is an economy that allocates resources through the decentralized decisions of many firms and household as they move in markets for goods and servi ces. 7. Government can sometimes improve market outcomes -market economies needs trigger to enforce property rights so individuals can sustain and program line scarce resources. market failure refers to a situation in which market on its own fails to produce an efficient allocation of resources. -market power refers to the index of a single person or small group to have a substantial wreak on a market charges. 8. A fields standard of living depends on its ability to produce goods and services -productivity means the touchstone of goods and services produced from each of labor input. 9. Prices rise when the politics prints too much currency -inflation refers to an increase in the overall take aim of prices in the economy. 0. Society faces a short-run trade-off between inflation and unemployment -short run effects of monetary injections are increasing the inwardness of money in the economy stimulates the overall level of spending, firms to raise their prices hiring more workers, produce larger metre of product and services and lower employment. Economic system comprises 1. step down market economy allocation for resources is determined besides by their supply and demand for them with a little or no government program line.It is also called as capitalist. avails quick respond to the peoples wants, wide variety of goods and services and efficient use of resources encouraged. Disadvantages unemployment, sure goods and services may not be provided, consumption of disadvantageous goods and services may be encouraged, and ignorance of social cost.Examples, United State, Canada, United Kingdom, South Africa, Mexico Germany. Lassez-Faire economics one of the steer principles of capitalism, this doctrine claims that economic system should be throw in the towel from government intervention or moderation and be driven only by the market forces. French word means allow to pass or let go.Invisible hand a term coined by economist Adam metalworker in hi s 1776 hold up An Inquiry into the Nature and Causes of the Wealth of Nations. Smith assumed that individuals try to maximize their own good (and cash in ones chips wealthier), and by doing so, through trade and entrepreneurship. Furthermore, any government intervention in the economy isnt inevitable because the invisible hand is the best overtake for the economy.Thus, the invisible hand is essentially a natural phenomenon that guides free markets capitalism through competition for scarce resources. 2. Planned economy market is controlled and determined by government. hand the government dictatorship type control over the resources of the democracy. It is also called as socialist.Advantages the upbeat of the citizen is the primary object of the economic system, wasteful competition is avoided, reinforcement are controlled by state and there is no industrial unrest, there is a greater fury on the measuring stick of life (health, education, elimination of poverty, moral d irection) than on the measurement of production (output) in the country and can rovide stability. Disadvantages can limit the growth and advancement of the country if the government does not allocate resources to the innovational enterprises, no liberty of choices for producers and or consumers and lack of incentives for workers results in low morale efficiency. Examples Cuba, Venezuela, China and Vietnam. 3.Mixed economy includes a mixture of capitalism and socialism. The combination of private economic freedom and centralized economic planning and government regulation. Advantages benefit from capitalist and socialist, still emphasis on welfare of society, less income inequality and monopolies exist but under close supervision of the government.Disadvantages lower the optimum use of resources and enterprises face difficulties due to government discrimination and bureaucratic nature. Examples France, Spain Italy, South Korea and Brazil. Circular-flow diagram a visual tou ghie of the economy that shows how dollars flows through markets among households and firms. MARKETS FOR GOODS AND SERVICES * Firms deal * Household buy FIRMS * Produce and sell goods and services * take away and use factors of productionsMARKETS FOR FACTORS OF PRODUCTION * Households sell * Firms buy Revenue Spending HOUSEHOLDS * buy and consume goods and services * own and sell factors of production Goods and services interchange Goods and services bought Factors of production Labor, land and capital Wages, rent and profit Income This diagram is a schematic mold of the organization of the economy.Decisions are made by households and firms. Household and firms interact in the markets for goods and services (where households are buyers and firms are sellers) and in the market for the factors of production (where firms are buyers and households are sellers). The outer(prenominal) set of arrows show the flow of dollars and the inward set of arrows show the corresponding flow of i nputs and output. The Production Possibilities boundary shows the combination of output, in this case cars and computers that economy can possibly can produce.The economy can produce any combination on or inside the term . Points outside the frontier are not feasible given the economys resources. A trade in the production Possibilities Frontier -a technical advance in the computer manufacture enables the economy to produces more computer for any given number of cars. As a result, the production possibilities frontier shifts outwards.Market Market a group of buyer and sellers of a peculiar(a) goods and services Competitive market a market in which there are many buyers and sellers so that each has negligible impact on the market price. Perfectly competetive must have 2 characteristics 1) the goods offered for exchange are exactly the same 2) the buyers and sellers are so numerous that no single buyer or seller has any influence over the market price.Monopoly only one seller o ffer for the circumstantial goods and services and this seller sets the price. Demand Demand goods and services that buyers are willing and able to purchase. measuring demanded the amount of goods that buyers are willing and able to purchase. The demand curve The birth between price and meter demanded Law of demand the claims that, other thing equal, the quantity demanded of a goods falls when the price of the goods rises. Demand schedule a table shows the human relationship between the price of good and the quantity demanded.Individual demand the demands of one person for the occurrence goods and services Market demand the sum of all the individual demands for the particular goods and services Price of ice-cream Quantity of ice-cream demanded Nick Mary Market $0. 00 7 5 12 $0. 50 6 4 10 $1. 00 5 3 8 $1. 50 4 2 6 $2. 00 3 1 4 $2. 50 1 1 2 $3. 00 0 0 0 Variables/Determinants that shift the demand curve 1. Income 2. Price of related goods 3. Tastes 4. Expectation 5. pattern of buyer Types of goods 1. Public goods non contender and non excludability. National defence a. Free goods goods with no opportunity cost.Air, sea b. virtuousness goods people underestimate benefit. Education 2. Private goods have rivalry and excludability a. Demerit goods underestimate cost of overpowering it. Drugs, cigarettes etc b. Normal goods always use in a effortless life. Income increases/demand increases. Clothes, shoes etc. c. low-level goods lower quality. Income increases/demand decreases. Bread, rice, bus service etc. d. Substitutes goods have same functions. Price increases/demand for another brand increases. colgate, darlie, sensodyne etc. e. Complement goods needs each other in using it. Price increases/demand for the other decreases. ar and gasoline. f. Luxury goods very expensive goods. Price increases/demand increases. Supply Supply goods and services that producers are willing and able to sell. Quantity supplied the amount of a goods that sellers are willing and able to sell Law of supply the claim that, other thing equal, the quantity supplied of a good rises when the price of a good rises. Supply schedule a table that shows the relationship between the price of a good and the quantity supplied. Supply curve a graph of the relationship between the price of good and the quantity supplied.Market supply the sum of all the individual supplies for the particular goods and services Price of ice-cream Quantity of ice-cream supplied Mike earth-closet Market $0. 00 0 0 0 $0. 50 1 1 2 $1. 00 3 1 4 $1. 50 4 2 6 $2. 00 5 3 8 $2. 50 6 4 10 $3. 00 7 5 12 Variables/Determinants that shift the supply curve. 1. Input prices 2. Technology 3. Expectations 4. recite of sellers Equilibrium Equilibrium a situation in which the market price has reached the level at which quantity supplied equals to quantity demanded.Equilibrium price the price that balances quantity supplied and quantity demanded Equilibrium quantity the quantity supplied and the quantit y demanded at the equilibrium price. Surplus a situation in which quantity supplied is greater than quantity demanded. Shortage a situation in which quantity demanded is greater than quantity supplied Law of supply and demand the claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance.A Change in Market Equilibrium Due to a shift in Demand -A vehement weather makes peoples want to eat more ice cream, the demand curve shifts to the right. A Change in Market Equilibrium Due to a shift in Supply -Increase in price of starting line will increase the cost of production, the supply curve shifts to the left. Shifts in both Supply and demand -A caustic weather will increases the demand of ice cream and the hurricane will decreases the supply of ice cream1.Discuss Four Building Blocks for Achieving Competitive Advantage in an Organization.PRINCIPLES OF MICROECONOMICS No 12 PED 1113 1. Name of Subject PRINCIPLES OF MICR OECONOMICS 2. Code of Subject PED1113 3. Synopsis This course will give students good exposure to basic economic concepts. They need to be able to understand, analyse and implement the theoretical conceptual into the existing economic situation. 4. Name of Teaching Staff Rezal emailprotected com 5. Semester and Year Offered Year 1, Sem 1 6. Credit Value 3 credits (2 hours lecture and 1. 5 tutorial) 7. Prerequisite (if any) Nil 8. Rationale for the inclusion of the subject in the program The need for economics knowledge in all fields of studies. 9. Mode of Delivery Lecture and Tutorial 10. Subject Objectives To equip students with basic economics knowledge so as to be able to apply in day to day tasks. Able to understand and analyse economics theories and conceptual. 11. Learning Outcomes Upon completing this course, students will be able to 1. Understand the basic concept of economics. 2. Apply the concepts demand and supply to identify how market reached its equil ibrium position. 3.Identify various coefficients in elasticity and understand how rational consumers behave. 4. Identify the production process and how cost is determined. 5. Understand various market structures and its profit position both in the short and long run. 12. Transferable Skills From this course, students will acquire additional transferable skills namely * Analytical Skill students were given questions and analyse the outcome that arises due to the situation given. * Research skills Students are required to conduct assignment on selected topics either individually or in groups. Social skills Students will develop basic social skills through class discussions and group assignments. * Time-management skills Students will learn to practice and manage their time to balance between their academic and social responsibilities. * Critical thinking skills Students will develop critical thinking ability through coursework completion, problem solving exercises and class discu ssions. 13. Teaching Learning and Assessment Strategy Teaching & Learning Methods Assessment Strategy Discussion / 1. Peer evaluation 2.Student assessment feedback Problem solving 3. Case study / Project / Lecture / Tutorial 14. Assessment Method and Types Final Examination 40%Course Work 60%Course work comprises of the following items 2 Test 30% 4 Quizzes 20% Group Assignment 10% Content outline of the course/module and the SLT per topic TOPIC (S) Lecture Tutorial Lab/ Practical Independent Study Student Learning Time (SLT) 1. 0 INTRODUCTION TO ECONOMICS 1. 1 Basic economic concepts scarcity, choices and opportunity cost. 1. 2 Basic economic problems 1. 3 Economics system comprises free market, planned economy and Mixed economy. 2 1. 5 5 18 1. 0 Demand, Supply and Market Equilibrium. 1. 1 Demand 1. 2. 1 Definition of demand 1. 2. 2 Law of demand 1. . 3 Market demand curve 1. 2. 4 Determinants of demand 1. 2 Supply 1. 3. 5 Definition of supply 1. 3. 6 Law of supply 1. 3. 7 Market supply curve 1. 3. 8 Determinants of supply 1. 3 Market Equilibrium 1. 4. 9 Definition of equilibrium 1. 4. 10 Condition of equilibrium 1. 4. 11 Changes in demand and supply 8 6 20 28 1. 0 Elasticity and Consumer Behavior 1. 1 Elasticity 1. 2. 1 Price elasticity of demand 1. 2. 2 Cross lasticity of demand 1. 2. 3 Income elasticity of demand 1. 2. 4 Elasticity of supply 1. 2 Consumer Behaviour 1. 3. 5 Ordinal Approach 1. 3. 6 Cardinal Approach 6 4. 5 16 26 1. 0 Theory of Production and Costs of Production 1. 1 Theory of production 1. 2. 1 Definition of production 1. 2. 2 Variable input and fixed input 1. 2. 3 Short-run and long-run period 1. 2. 4 Total product, average product and marginal product 1. 2 Cost of production4. 2. Calculation of seven (7) types of cost of production the in the short-run period 6 4. 5 14 24 6. 0 Market Structure 5. 1 Perfect competition5. 1. 1 Characteristics5. 1. 2 Profit maximization in the short-run5. 1. 3 Prof it maximization in the long-run 5. 2 Monopolistic Competition5. 2. 1 Characteristics5. 2. 2 Profit maximization in the short-run5. 2. 3 Profit maximization in the long-run 5. 3 Monopoly5. 3. 1 Characteristics5. 3. 2 Profit maximization in the short-run5. 3. 3 Profit maximization in the long-run 6 4. 16 24 Total of Student Learning Time (SLT) 28 21 71 120 Main Reference supporting the course 1) Deviga, V and Karunagaran, M. (2007) Principles of Economics, 1st edition, Shah Alam Oxford Fajar Sdn. Bhd. 20. Additional References 1) David Begg, Stanley Fischer and Rudiger Dornbusch, 2003, Economics, 7th ed. , McGraw-Hill. 2) Baumol W. J and Blinder, 1998, A. S. Economics Principles and Policy, Harcourt. 3) Sadono Sukirno, 1998, Mikroekonomi, Edisi ke-3. 4) Colanderm D. C. , 1995, Economics, Irwin. 5) Campbell R. Mc Connel & Stanley L.Brue, 1993, Economics, McGraw-Hill. 6) Lipsey, R. G. , 1992, The Fundamentals to Positive Economics, Harper and Row. 7) Hashim Ali (2003) Comprehensi ve Economics Guide, 2nd edition, Singapore Oxford University Press. Assignment topic. Choose one topic from the list below and form a group in which consists of minimum 4 students and maximum 6 students. Submission of assignment first week after term break. 1. Economic system in the world 2. Governments roles in the market 3. Demand and supply 4. Consumer behaviour 5. Production process and costs involve. . New product in the market. Introduction to economics -the word economy comes from the Greek word oikonomos, which means one who manages a household -economics is the study of how society manages its scarce resources. -the management of societys resources is important because resources are scarce. -scarcity means that society has limited resources and therefore cannot produce all the goods and services people wish to have. -opportunity cost of an item is what you give up in order to get another item. Ten principles of economics 1. People face trade-off to get one thing that we li ke, we usually have to give up another thing that we like. -for example parents deciding how to spend their family income. They can buy food, clothing, or a family vacation. -efficiency means that society is getting the maximum benefits from its scarce resources. -equality means that those benefits are distributed uniformly among societys members. 2. The cost of something is what you give up to get it -making decisions require comparing the costs and benefits of alternative courses of a action 3. Rational people think at the margin. rational people are the people who systematically do the best they can to achieve their objectives, given the available opportunities. -marginal changes mean small incremental adjustments to an existing plan of action. 4. People respond to incentives -incentives is something that induces a person to act, such as the prospect of a punishment or a reward. -example, a higher price in a market provides an incentive for buyers to consume less and an incentive for sellers to produce more. 5. Trade can make everyone better off trade allows each person to specialize in the activities he or she does best -by trading with other, people can buy a greater variety of goods and services at lower lower cost. 6. Markets are usually a good way to organize economic activity -market economy is an economy that allocates resources through the decentralized decisions of many firms and household as they interact in markets for goods and services. 7. Government can sometimes improve market outcomes -market economies needs institution to enforce property rights so individuals can own and control scarce resources. market failure refers to a situation in which market on its own fails to produce an efficient allocation of resources. -market power refers to the ability of a single person or small group to have a substantial influence on a market prices. 8. A countrys standard of living depends on its ability to produce goods and services -productivity means th e quantity of goods and services produced from each of labor input. 9. Prices rise when the government prints too much money -inflation refers to an increase in the overall level of prices in the economy. 0. Society faces a short-run trade-off between inflation and unemployment -short run effects of monetary injections are increasing the amount of money in the economy stimulates the overall level of spending, firms to raise their prices hiring more workers, produce larger quantity of product and services and lower employment. Economic system comprises 1. Free market economy allocation for resources is determined only by their supply and demand for them with a little or no government control.It is also called as capitalist. Advantages quick respond to the peoples wants, wide variety of goods and services and efficient use of resources encouraged. Disadvantages unemployment, certain goods and services may not be provided, consumption of harmful goods and services may be encouraged, a nd ignorance of social cost.Examples, United State, Canada, United Kingdom, South Africa, Mexico Germany. Lassez-Faire economics one of the guiding principles of capitalism, this doctrine claims that economic system should be free from government intervention or moderation and be driven only by the market forces. French word means allow to pass or let go.Invisible hand a term coined by economist Adam Smith in his 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations. Smith assumed that individuals try to maximize their own good (and become wealthier), and by doing so, through trade and entrepreneurship. Furthermore, any government intervention in the economy isnt needed because the invisible hand is the best guide for the economy.Thus, the invisible hand is essentially a natural phenomenon that guides free markets capitalism through competition for scarce resources. 2. Planned economy market is controlled and determined by government. Give the government dictators hip type control over the resources of the country. It is also called as socialist.Advantages the welfare of the citizen is the primary goal of the economic system, wasteful competition is avoided, wages are controlled by state and there is no industrial unrest, there is a greater emphasis on the quantity of life (health, education, elimination of poverty, moral direction) than on the quantity of production (output) in the country and can rovide stability. Disadvantages can limit the growth and advancement of the country if the government does not allocate resources to the innovative enterprises, no freedom of choices for producers and or consumers and lack of incentives for workers results in low morale efficiency. Examples Cuba, Venezuela, China and Vietnam. 3.Mixed economy includes a mixture of capitalism and socialism. The combination of private economic freedom and centralized economic planning and government regulation. Advantages benefit from capitalist and socialist, still emphasis on welfare of society, less income inequality and monopolies exist but under close supervision of the government.Disadvantages lower the optimum use of resources and enterprises face difficulties due to government favouritism and bureaucratic nature. Examples France, Spain Italy, South Korea and Brazil. Circular-flow diagram a visual model of the economy that shows how dollars flows through markets among households and firms. MARKETS FOR GOODS AND SERVICES * Firms sell * Household buy FIRMS * Produce and sell goods and services * Hire and use factors of productionsMARKETS FOR FACTORS OF PRODUCTION * Households sell * Firms buy Revenue Spending HOUSEHOLDS * buy and consume goods and services * own and sell factors of production Goods and services sold Goods and services bought Factors of production Labor, land and capital Wages, rent and profit Income This diagram is a schematic representation of the organization of the economy.Decisions are made by households and fir ms. Household and firms interact in the markets for goods and services (where households are buyers and firms are sellers) and in the market for the factors of production (where firms are buyers and households are sellers). The outer set of arrows show the flow of dollars and the inner set of arrows show the corresponding flow of inputs and output. The Production Possibilities Frontier shows the combination of output, in this case cars and computers that economy can possibly can produce.The economy can produce any combination on or inside the frontier . Points outside the frontier are not feasible given the economys resources. A shift in the production Possibilities Frontier -a technological advance in the computer industry enables the economy to produces more computer for any given number of cars. As a result, the production possibilities frontier shifts outwards.Market Market a group of buyer and sellers of a particular goods and services Competitive market a market in which th ere are many buyers and sellers so that each has negligible impact on the market price. Perfectly competetive must have 2 characteristics 1) the goods offered for sale are exactly the same 2) the buyers and sellers are so numerous that no single buyer or seller has any influence over the market price.Monopoly only one seller offer for the specific goods and services and this seller sets the price. Demand Demand goods and services that buyers are willing and able to purchase. Quantity demanded the amount of goods that buyers are willing and able to purchase. The demand curve The relationship between price and quantity demanded Law of demand the claims that, other thing equal, the quantity demanded of a goods falls when the price of the goods rises. Demand schedule a table shows the relationship between the price of good and the quantity demanded.Individual demand the demands of one person for the particular goods and services Market demand the sum of all the individual demands for th e particular goods and services Price of ice-cream Quantity of ice-cream demanded Nick Mary Market $0. 00 7 5 12 $0. 50 6 4 10 $1. 00 5 3 8 $1. 50 4 2 6 $2. 00 3 1 4 $2. 50 1 1 2 $3. 00 0 0 0 Variables/Determinants that shift the demand curve 1. Income 2. Price of related goods 3. Tastes 4. Expectation 5. Number of buyer Types of goods 1. Public goods non rivalry and non excludability. National defence a. Free goods goods with no opportunity cost.Air, sea b. Merit goods people underestimate benefit. Education 2. Private goods have rivalry and excludability a. Demerit goods underestimate cost of consuming it. Drugs, cigarettes etc b. Normal goods always use in a daily life. Income increases/demand increases. Clothes, shoes etc. c. Inferior goods lower quality. Income increases/demand decreases. Bread, rice, bus service etc. d. Substitutes goods have same functions. Price increases/demand for another brand increases. colgate, darlie, sensodyne etc. e. Complement goods needs each othe r in using it. Price increases/demand for the other decreases. ar and gasoline. f. Luxury goods very expensive goods. Price increases/demand increases. Supply Supply goods and services that producers are willing and able to sell. Quantity supplied the amount of a goods that sellers are willing and able to sell Law of supply the claim that, other thing equal, the quantity supplied of a good rises when the price of a good rises. Supply schedule a table that shows the relationship between the price of a good and the quantity supplied. Supply curve a graph of the relationship between the price of good and the quantity supplied.Market supply the sum of all the individual supplies for the particular goods and services Price of ice-cream Quantity of ice-cream supplied Mike John Market $0. 00 0 0 0 $0. 50 1 1 2 $1. 00 3 1 4 $1. 50 4 2 6 $2. 00 5 3 8 $2. 50 6 4 10 $3. 00 7 5 12 Variables/Determinants that shift the supply curve. 1. Input prices 2. Technology 3. Expectations 4. Number of sel lers Equilibrium Equilibrium a situation in which the market price has reached the level at which quantity supplied equals to quantity demanded.Equilibrium price the price that balances quantity supplied and quantity demanded Equilibrium quantity the quantity supplied and the quantity demanded at the equilibrium price. Surplus a situation in which quantity supplied is greater than quantity demanded. Shortage a situation in which quantity demanded is greater than quantity supplied Law of supply and demand the claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance.A Change in Market Equilibrium Due to a shift in Demand -A hot weather makes peoples want to eat more ice cream, the demand curve shifts to the right. A Change in Market Equilibrium Due to a shift in Supply -Increase in price of sugar will increase the cost of production, the supply curve shifts to the left. Shifts in both Supply and demand -A hot weather will increases the demand of ice cream and the hurricane will decreases the supply of ice cream