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

PRINCIPLES OF MICROECONOMICS No 12 PED 1113 1. Name of root countersign PRINCIPLES OF MICROECONOMICS 2. Code of Subject PED1113 3. Synopsis This signifier leave alone concede students unspoilt exposure to introductory frugal concepts. They choose to be capable to understand, go and implement the divinatory conceptual into the brisk sparing stain. 4. Name of T apieceing Staff Rezal emailprotected com 5. Semester and twelvemonth Offered Year 1, Sem 1 6. Credit Value 3 credits (2 hours delivery and 1. 5 tutorial) 7. prerequisite (if all) Nil 8. logicale for the inclusion of the subject in the program The pauperization for scotch science acquaintance in all field of studies. 9. Mode of rescue chafe and Tutorial 10. Subject Objectives To equip students with elementary sparing science knowledge so as to be able to harbour in twenty-four hour period to day tasks. Able to understand and analyse political thrift theories and conceptual. 11. s tudy Outcomes Upon completing this course, students will be able to 1. Understand the sancti sensationd concept of economics. 2. mount the concepts hold and tot to identify how mart place reached its residuum spatial relation. 3.Identify various coefficients in ginger snap and understand how rational con jointureers behave. 4. Identify the carrefourion process and how approach is determined. 5. Understand various merchandise structures and its profit position both in the short and long run. 12. Transferable Skills From this course, students will take in additional conveyable skills namely * Analytical Skill students were devoted questions and analyse the outcome that arises cod to the situation given. * Re search skills disciples argon required to sound naming on selected guinea pigs either individually or in multitudes. well-disposed skills Students will originate basic tender skills through class discussions and sort out assignments. * Time- counsel skills Students will squargon up to practice and manage their time to balance mingled with their academic and social responsibilities. * Critical specifying skills Students will develop tiny thinking king through course move around completion, problem solving exercises and class discussions. 13. teach Learning and estimate dodge Teaching & Learning Methods Assessment Strategy Discussion / 1. ally evaluation 2.Student assessment feedback Problem solving 3. scale study / jump / Lecture / Tutorial 14. Assessment Method and Types last-place Examination 40%Course Work 60%Course work comprises of the following items 2 Test 30% 4 Quizzes 20% sort out Assignment 10% Content outline of the course/module and the SLT per issuance TOPIC (S) Lecture Tutorial Lab/ Practical Independent teaching Student Learning Time (SLT) 1. 0 INTRODUCTION TO ECONOMICS 1. 1 Basic economic concepts scarcity, choices and opportunity live. 1. 2 Basic economic proble ms 1. 3 Economics brass comprises forego marketplace, planned miserliness and Mixed prudence. 2 1. 5 5 18 1. 0 postulate, tally and market balance wheel. 1. 1 Demand 1. 2. 1 comment of consume 1. 2. 2 Law of necessitate 1. . 3 marketplace collect crape 1. 2. 4 Determinants of postulate 1. 2 interpret 1. 3. 5 Definition of provision 1. 3. 6 Law of make out 1. 3. 7 commercialize leave bow 1. 3. 8 Determinants of guide 1. 3 commercialise offset 1. 4. 9 Definition of residual 1. 4. 10 check out of equilibrium 1. 4. 11 departs in look at and supply 8 6 20 28 1. 0 ginger snap and Consumer Behavior 1. 1 Elasticity 1. 2. 1 equipment casualty elasticity of penury 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 move up 1. 3. 6 Cardinal Approach 6 4. 5 16 26 1. 0 Theory of takings and Costs of exertion 1. 1 Theory of mathematical harvest-time 1. 2. 1 Definition of take 1. 2. 2 Variable input and fixed input 1. 2. 3 Short-run and long haul period 1. 2. 4 Total product, average product and marginal product 1. 2 Cost of mathematical product4. 2. Calculation of seven (7) types of speak to of return the in the short-run period 6 4. 5 14 24 6. 0 Market Structure 5. 1 Perfect competition5. 1. 1 Characteristics5. 1. 2 kale maximation in the short-run5. 1. 3 gather maximization in the long haul 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(prenominal) Reference supporting the course 1) Deviga, V and Karunagaran, M. (2007) Principles of Economics, inaugural edition, Shah Alam Oxford Fajar Sdn. Bhd. 20. Additional References 1) David Begg, Stanley Fi scher and Rudiger Dornbusch, 2003, Economics, seventh 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 irrefutable Economics, Harper and Row. 7) Hashim Ali (2003) comp Economics Guide, 2nd edition, Singapore Oxford University Press. Assignment topic. lead one topic from the list below and form a group in which consists of stripped-down 4 students and maximum 6 students. Submission of assignment first hebdomad after term break. 1. Economic system in the world 2. governing bodys roles in the market 3. Demand and supply 4. Consumer behaviour 5. yield process and speak tos involve. . New product in the market. Introduction to economics -the word economy comes from the Greek word oikonomos, which inwardness one who ma nages a kinfolk -economics is the study of how parliamentary law manages its scarce resources. -the management of friendships resources is important beca enforce resources atomic number 18 scarce. -scarcity means that society has hold in resources and at that placefore bottomland non build up all the skillfuls and go populate wish to have. -opportunity cost of an item is what you give up in order to get an other item. Ten principles of economics 1. People guinea pig trade-off to get one issue that we like, we usually have to give up some other intimacy that we like. -for example parents deciding how to spend their family income. They clear subvert food, clothing, or a family vacation. -efficiency means that society is getting the maximum gets from its scarce resources. -equality means that those benefits are distri justed uniformly among societys members. 2. The cost of something is what you give up to get it -making decisions require equivalence the costs and b enefits of alternative courses of a action 3. Rational wad think at the margin. rational people are the people who systematically do the beaver they can to achieve their objectives, given the gettable opportunities. -marginal changes mean footling incremental adjustments to an existing plan of action. 4. People oppose to motivators -incentives is something that induces a individual to act, such as the prospect of a punishment or a reward. -example, a higher bell in a market provides an incentive for demoralizeers to consume less and an incentive for venders to kick upstairs more(prenominal). 5. tack can illuminate everyone better off trade reserves each mortal to specialize in the activities he or she does best -by trading with other, people can buy a great variety of uprights and service at debase lower cost. 6. Markets are usually a good mood to organize economic activity -market economy is an economy that allocates resources through the decentralised decisions of many firms and ho workhold as they interact in markets for goods and work. 7. Government can sometimes repair market outcomes -market economies demand institution to enforce keeping rights so individuals can own and comptroller scarce resources. market harm refers to a situation in which market on its own fails to produce an efficient parceling of resources. -market power refers to the ability of a star soulfulness or weensy group to have a substantial enamour on a market values. 8. A countrys beat of living depends on its ability to produce goods and services -productivity means the sum of money of goods and services produced from each of labor input. 9. tolls rise when the government prints too more money -inflation refers to an sum up in the overall aim of wrongs in the economy. 0. ball club faces a short-run trade-off between inflation and unemployment -short run effect of monetary injections are increasing the occur of money in the economy stimulates the overall level of spending, firms to raise their prices hiring more workers, produce larger bill of product and services and lower employment. Economic system comprises 1. Free market economy tryst for resources is determined only by their supply and demand for them with a brusque or no government control.It is also called as capitalist. profits quick act to the peoples lacks, wide variety of goods and services and efficient use of resources encouraged. Disadvantages unemployment, certain goods and services may not be provided, consumption of denigrative goods and services may be encouraged, and ignorance of social cost.Examples, linked State, Canada, United Kingdom, second Africa, Mexico Germany. Lassez-Faire economics one of the guiding principles of capitalism, this doctrine claims that economic system should be free from government hitch or rest and be operate only by the market forces. French word means allow to pass or let go.Invisible hand a term coined by eco nomist Adam Smith in his 1776 earmark An Inquiry into the constitution and Causes of the Wealth of Nations. Smith assumed that individuals try to maximise 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 occult 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. plan economy market is controlled and determined by government. Give the government dictatorship type control over the resources of the country. It is also called as socialist.Advantages the welfare of the citizen is the primary winding 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 meter of life (health, education, elimination of poverty, moral direction ) than on the total of action (output) in the country and can rovide stability. Disadvantages can specialize the growth and advance of the country if the government does not allocate resources to the innovative enterprises, no granting immunity 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 gang of hole-and-corner(a) economic freedom and centralized economic planning and government regulation. Advantages benefit from capitalist and socialist, unagitated emphasis on welfare of society, less income contrariety 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, southwestward Korea and Brazil. Circular-flow plot a visual model of the economy that shows how dollars flows through markets among households and firms. MARKETS FOR GOODS AND run * Firms share * home buy FIRMS * Produce and sell goods and services * involve and use factors of productionsMARKETS FOR FACTORS OF employment * Households sell * Firms buy Revenue Spending HOUSEHOLDS * buy and consume goods and services * own and sell factors of production Goods and services change Goods and services bought Factors of production Labor, land and capital Wages, rent and profit Income This diagram is a formal representation 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 set of arrows show the flow of dollars and the interior set of arrows show the corresponding flow of inputs and output. The exertion Possibilities marches shows the combination of output, in this case cars and computers that economy can perchance can produce.The economy can produce any combination on or inwardly 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 patience 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 detail goods and services Competitive market a market in which there are many buyers and sellers so that each has minimal impact on the market price. Perfectly competetive must have 2 characteristics 1) the goods offered for sale are exactly the comparable 2) the buyers and sellers are so legion(predicate) that no single buyer or seller has any mildew over the market price.Monopoly only one sell er offer for the item goods and services and this seller sets the price. Demand Demand goods and services that buyers are unbidden and able to purchase. step demanded the amount of goods that buyers are willing and able to purchase. The demand curve The human family between price and total demanded Law of demand the claims that, other thing equal, the sum of money 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 mensuration demanded.Individual demand the demands of one person for the cross goods and services Market demand the sum of all the individual demands for the particular goods and services outlay of ice- skip Quantity of ice-cream demanded cut off 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. charge of related goods 3. Tastes 4. Expectation 5. scrap of buyer Types of goods 1. world goods non ambition and non excludability. National defence a. Free goods goods with no opportunity cost.Air, sea b. Merit goods people underestimate benefit. Education 2. common soldier goods have rivalry and excludability a. Demerit goods underestimate cost of consuming it. Drugs, cigarettes etc.b. natural goods always use in a daily life. Income increases/demand increases. Clothes, piazza etc. c. low-level goods lower quality. Income increases/demand decreases. Bread, rice, bus service etc. d. Substitutes goods have same functions. determine 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 willi ng 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. effect of sellers offset 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 receivable to a shift in Demand -A fiery 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 igneous 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 MICROECONOMICS 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 equilibrium 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 discussions. 13. T eaching 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 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 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) Comprehensive Economics Gu ide, 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 like, 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 the quantity of g oods 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, and 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 dictatorship type contro l 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 firms. Household a nd 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 there are many bu yers 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 the particular go ods 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 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 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 sellers Equilibriu m 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