Introduction to Introduction to EconomicsEconomics

Course LayoutCourse Layout

The Economic ProblemThe Economic Problem

Positive & Normative StatementsPositive & Normative Statements

ExpectationsExpectations

Turn up on time- no excuses!Turn up on time- no excuses!Appearance – wear jackets to class, shirts tucked in, ties Appearance – wear jackets to class, shirts tucked in, ties done properlydone properlyBring the correct equipment – folders/notes, booksBring the correct equipment – folders/notes, booksComplete all homework and tasks on time – ask if help Complete all homework and tasks on time – ask if help required!required!Put your equipment/planner on the desk at the beginning Put your equipment/planner on the desk at the beginning of the lessonof the lessonNo eating or chewing in classNo eating or chewing in classNo mobile phones / MP3 players etc No mobile phones / MP3 players etc Respect Others! Respect Others!

Course Overview – AS EconomicsCourse Overview – AS EconomicsASAS

Unit 1: Unit 1: Competitive Markets — How They Work and Why They FailCompetitive Markets — How They Work and Why They Fail

Examination length: 1 hour 30 minutesExamination length: 1 hour 30 minutes

Supported multiple-choice questions where students write a short justification of why they Supported multiple-choice questions where students write a short justification of why they chose that answer and/or why the other answers are incorrect. Worth 32 marks.chose that answer and/or why the other answers are incorrect. Worth 32 marks.

One data response question out of a choice of two questions worth 48 marks.One data response question out of a choice of two questions worth 48 marks.

Total for paper: 80 marksTotal for paper: 80 marks

Unit 2: Unit 2: Managing the EconomyManaging the Economy

Examination length: 1 hour 30 minutesExamination length: 1 hour 30 minutes

One data response question out of a choice of two questions. Worth 50 marks.One data response question out of a choice of two questions. Worth 50 marks.

Last question of data response will be open ended. Worth 30 marks.Last question of data response will be open ended. Worth 30 marks.

Total for paper: 80 marksTotal for paper: 80 marks

Course OverviewCourse Overview

Exam board is Edexcel – Exam board is Edexcel – http://www.edexcel.com/gce2008/busihttp://www.edexcel.com/gce2008/business/economics/8EC01/Pages/as.aspness/economics/8EC01/Pages/as.aspxxPlease print off the specification for units 1, 2 Please print off the specification for units 1, 2 and (pages 13 to 34 of specification document), and (pages 13 to 34 of specification document), and put this at the front of your foldersand put this at the front of your folders

Homework Task.Homework Task.

Why Are Certain People So Highly Why Are Certain People So Highly Paid?Paid?

Wayne Rooney earns £250,000 a week, (not Wayne Rooney earns £250,000 a week, (not including bonuses!)including bonuses!)

In groups, discuss these three questions:In groups, discuss these three questions:– What determines a person's salary?What determines a person's salary?

– Why do professional sports people earn so much Why do professional sports people earn so much money?money?

– People who work as firefighters, police officers or People who work as firefighters, police officers or teachers are more important to our society, yet teachers are more important to our society, yet they make much less money: what explains this?they make much less money: what explains this?

So why do some people get paid so So why do some people get paid so much?much?

Think about it in terms of both Think about it in terms of both SUPPLY and DEMANDSUPPLY and DEMANDProfessional sports people make high Professional sports people make high salaries because people with their skills salaries because people with their skills are are scarcescarceThe demand for and supply of people in The demand for and supply of people in various occupations determines the various occupations determines the salaries in question—not the “importance” salaries in question—not the “importance” of the job to society. of the job to society.

ScarcityScarcity

The worlds resources are finite – i.e. there The worlds resources are finite – i.e. there are limited amounts of land, water, oil, are limited amounts of land, water, oil, food etc on this planetfood etc on this planetScarcity means that economic agents Scarcity means that economic agents (individuals, firms, governments) can only (individuals, firms, governments) can only obtain a limited amount of resources at obtain a limited amount of resources at any given time.any given time.Resources which are scarce are called Resources which are scarce are called Economic GoodsEconomic Goods

ScarcityScarcity

Not all resources are scarceNot all resources are scarce

Resources which are not scarce are called Resources which are not scarce are called Free GoodsFree Goods

As the population increases some free As the population increases some free goods have grown scarce, such as food or goods have grown scarce, such as food or clean beaches.clean beaches.

Infinite WantsInfinite Wants

People have a limited number of needs but an People have a limited number of needs but an infinite number of wantsinfinite number of wants

The Economic Problem – the allocation of The Economic Problem – the allocation of scarce resources between competing usesscarce resources between competing uses

Discussion:Discussion:

What are the minimum needs for a teenager What are the minimum needs for a teenager living in the UK now? How might this differ from living in the UK now? How might this differ from a teenager in sub-Saharan Africa?a teenager in sub-Saharan Africa?

The Economic ProblemThe Economic Problem

What goods and services should an economy What goods and services should an economy produce?produce? – should the emphasis be on agriculture, – should the emphasis be on agriculture, manufacturing or services, should it be on sport and manufacturing or services, should it be on sport and leisure or housing?leisure or housing?

How should goods and services be produced?How should goods and services be produced? – – labour intensive, land intensive, capital intensive? labour intensive, land intensive, capital intensive? Efficiency?Efficiency?

Who should get the goods and services produced?Who should get the goods and services produced? – – even distribution? more for the rich? for those who work even distribution? more for the rich? for those who work hard?hard?

Positive and Normative Positive and Normative EconomicsEconomics

Positive Statements: Positive Statements: – Statements which are capable of being verified or Statements which are capable of being verified or

refuted via data or further investigationrefuted via data or further investigation

Normative Statements:Normative Statements:– Value judgements which cannot be verified by data Value judgements which cannot be verified by data

or further investigationor further investigation

Exam TechniqueExam Technique

Any phrase which contains words such as Any phrase which contains words such as “should”, “ought”, “better”, “fair” etc are “should”, “ought”, “better”, “fair” etc are obviously normative statements as these obviously normative statements as these words are subjectivewords are subjective

Always define both positive and normative Always define both positive and normative statements in an examstatements in an exam

Always state which piece of data or which fact Always state which piece of data or which fact can be proved in a positive statementcan be proved in a positive statement

Positive or Normative?Positive or Normative?

Arsenal are better than TottenhamArsenal are better than Tottenham

75% of the price of a packet of cigarettes is 75% of the price of a packet of cigarettes is taxtax

The economy grew by 0.3% in the first The economy grew by 0.3% in the first quarter of 2013quarter of 2013

The UK should leave the EUThe UK should leave the EU

Increasing the top rate of tax to 50% would Increasing the top rate of tax to 50% would increase fairnessincrease fairness

January 2011January 2011

June 2011June 2011