Authors:
Brian T. Kench, Ph.D
Chapters:
Comparative Advantage and the Benefits of Trade
Demand & Supply
The Costs of Production and Profit Maximization
Economic Performance Metrics
Money & Banking
Aggregate Demand & Aggregate Supply
Audience: Anyone needing to acquire the basic mathematical and statistical skills required to perform operations critical to business functions.
Abstract: The purpose of this package is to provide managers with fundamental economic principles, which they may use to think critically about micro and macro economic events.
Chapter 1 introduces the concepts of opportunity cost and comparative advantage. The chapter offers a discussion of how these concepts are used to prove the mutual advantage of individuals, businesses or countries specializing in things with which they have a comparative advantage and trading for the rest. The chapter also introduces the factors of production, production possibilities frontiers, increasing opportunity cost, and absolute advantage.
Chapter 2 provides an introduction to the model of demand and supply. Economists use the model of demand and supply to analyze how buyers and sellers interact in the marketplace. It shows how market prices are determined and it demonstrates how many units of a good or service will be bought and sold. Elasticity concepts are discussed in detail. And many applications of the model of demand and supply are offered, including price controls and tax analysis.
Chapter 3 introduces short run and long run economic costs of production concepts. The profit maximizing rule is applied to both a perfectly competitive business environment and a monopolistic business environment.
In Chapter 4 we shift gears from studying the underlying microeconomic foundations of consumers and businesses to studying the elements of macroeconomic behavior. Macroeconomics offers a set of tools and concepts that both economists and policymakers use to try to figure out the overall pulse of the economy. The most important of these tools are introduced in this chapter; they are: real gross domestic product, the national income identity, the consumer price index, the producer price index, the inflation rate, and the unemployment rate.
Chapter 5 introduces the functions of money, the types of money, the classifications of the money supply, the central bank, the money creation process, and the monetary policy tools used by a central bank.
Chapter 6 This chapter provides an introduction to the model of aggregate demand and aggregate supply. Economists use the model of aggregate demand and aggregate supply to analyze the economy-wide (or macro) effect of economic events. Inflationary gaps and deflationary gaps are discussed. Using the model of aggregate demand and aggregate supply, fiscal policy and monetary policy are introduced as tools to diminish the effect of an inflationary or a deflationary gap.