Matakuliah
Tahun
: J0594-Teori Ekonomi
: 2009
LIMITS, ALTERNATIVES, AND CHOICES
Pertemuan 1
The Economic Perspective
• Scarcity and Choice
- Scarce economic resources mean limited goods and Services
- Scarcity restrics options and demand choice
• Purposeful behavior
- Economics assumes that human behavior reflects “rational selfinterst”
- Purposeful behavior does not assume that people and institutions are
immune from faulty logic and therefore are perfect decisions maker
- Rational self-interest is not the same as selfishness
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The Economic Perspective
• Marginal Analysis : Benefits and Cost
- The economic perspective focuses largely on marginal analysiscomparison of marginal benefits and marginal costs usually for
dicisions making
- In making choices rationally, the decision maker must compare those
two amounts.
- In a wolrd scarcity, the dicisions to obtain the marginal benefit
ascociated with some spesific option always includes the marginal
cost of forgoing something else
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Macroeconomics and Microeconomics
• Macroeconomics examines either the company as a
whole or its basic subdivisions or aggregates, sucs as the
government, household, and business sector
• Microeconomics is the part of economics concerned with
individual unit such a person, a hosehold, a firm, or an
industry
• Positive economics deals with factual statement (“what is”),
normative economics involve value judgments (“what
ought to be)
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Individual’s Economizing Problem
•
•
•
•
•
•
•
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Limited Income
Unlimited Wants
A Budget Line
Attainable and Unattainable Combinations
Tradeoffs & Opportunity Costs
Choice
Income Change
6
Individuals’ Economizing Problem
• Because wants exceed incomes, individuals face an
economizing problems; they must decide what to buy and
what to forgo
• A Budget line (budget constrains) shows the various
combinations of two goods that a consumer can purchase
with a spesific money income
• straight line budget constarins imply constant opportunity
cost asscociated weith obtaining more of either of the two
goods
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Individuals’ Economizing Problem
$120 Budget
12
DVDs
$20
10
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0
2
4
6
8
10
12
Quantity of DVDs
6
5
4
3
2
1
0
Books
$10
Income = $120
=6
Pdvd = $20
8
Unattainable
6
Income = $120
= 12
Pb = $10
4
2
0
Attainable
2
4
6
8
10
Quantity of Books
12
14
8
Society’s Economizing Problem
• Scarce Resources
• Resource Categories
– Land
– Labor
– Capital
• Investment
– Entrepreneurial Ability
• Factors of Production
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Society’s Economizing Problem
• Economists catagories economics resources as land, labor,
capital, and entrepreneurial ability
• The production possibilities curve illustrates several ideas :
a. scarcity of resources
b. choice among outputs
c. opportunity cost
d. the law of increasing opportunity cost
• A comparison of marginal benefits and marginal cost is
needed to determine the best or optimal output mix on a
production possibilities curve
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Production Possibilities Model
Assume :
• Full Employment
• Fixed Resources
• Fixed Technology
• Two Goods
– Consumer Goods (Exp :Pizzas)
– Capital Goods (Exp : Industrial Robots)
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Production Possibilities Model
Production Possibilities Table
Production Alternatives
Type of Product
Pizzas
A
B
C
D
E
0
1
2
3
4
10
9
7
4
0
(in hundred thousands)
Industrial Robots
(in thousands)
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Plot Points to Create Graph…
12
Industrial Robots
Production Possibilities Model
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A’
14
13
12
11
10
9
8
7
6
5
4
3
2
1
B’
Unattainable
A
Economic
Growth
C’
B
C
D’
D
Now Attainable
Attainable
E’
E
0
1
2
3
4
5
6
7
Pizzas
8 9
13
Production Possibilities Model
Industrial Robots
Production Possibilities Curve
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A’
14
13
12
11
10
9
8
7
6
5
4
3
2
1
B’
Unattainable
A
C’
B
Law of Increasing
Opportunity Cost
C
D’
Shape of
the Curve
D
Attainable
E’
E
0
1
2
3
4
5
6
7
Pizzas
8 9
14
Production Possibilities Model
Industrial Robots
Production Possibilities Curve
14
13
12
11
10
9
8
7
6
5
4
3
2
1
A’
B’
Unattainable
C’
U
D’
Under or
Unemployment
0
1
2
3
4
5
6
7
8 9
E’
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Pizzas
Production Possibilities Model
Marginal Benefit & Marginal Cost
Optimal Allocation of Resources
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a
c
MC
MB = MC
e
10
5
b
d
MB
0
1
2
Quantity of Pizza
3
16
Unemployment, Growth, and the Future
• Unemployment causes an economy to operate at point inside
its production possibilities curve
• Increases in resource supplies, improvements in resource
quality, and technological advance cause economic growth,
which is depicted as an outward shift of the production
possibilities curve
• An economiy’s present choice of capital and consumer goods
helps determine the fiture location of its production possibilities
curve
• International specialization and trade enable a nation to obtain
more goods than its production possibilities curve indicates
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