Students are introduced to the course information and course requirements.
Study goals: Understand and describe the basic mechanism of the economy and the discipline of economics. Understand the concept of scarcity and opportunity cost. Discuss the major branches of economics: positive, normative, microeconomics, macroeconomics. Distinguish between goods and services, rare and free goods, inputs and outputs.
Students should be able to: - Discuss the purposes and functions of markets. - Explain how a demand curve illustrates the law of demand and distinguish between a change in demand and a change in quantity demanded. - Explain how a supply curve illustrates the law of supply and distinguish between a change in supply and a change in quantity supplied. - Locate the equilibrium point on a supply and demand diagram. - Explain the consequences of shortages and surpluses in markets and how they are eliminated in free competitive markets.
Students should be able to: Understand the terms rational, preferences, utility, budget. Discuss the difference between cardinal and ordinal approach to utility. Explain the difference between total and marginal utility. Describe the conditions for consumer equilibrium. Analyse the impact of price change and income change on consumer choice.
Students should be able to: Understand how individual demand (and market demand) is derived from consumer equilibrium. Distinguish the shapes of PCC based on the preferences. Calculate and interpret the values of price elasticity of demand. Understand how price elasticity impacts the total revenues. Calculate and interpret the values of income elasticity of demand. Calculate and interpret the values of cross elasticity of demand.