SSE 203 Microeconomics: Economic Theory & Consumer Behavior

• SSE 203 is a microeconomics course
• The instructor is Florry May N. Uyanguren, LPT
• The course analyzes the market system, means of production, consumption, and exchange
• It explores the determinants of supply and demand, theories of consumer behavior, basic economic theories, and economic history
• Pre-service teachers should be able to demonstrate an understanding of consumer behavior theories, basic economic theories, and the history of economics
• They should demonstrate knowledge of the market system and means of production
• It teaches to apply critical and creative thinking through surveys of small businesses.

Functions of Economic Theory

• Economic theory serves several functions in microeconomics
• It aids to understand and analyze individual and firm behavior
• It helps understanding market mechanisms and resource allocation

Explanation of Consumer Behavior

• Consumer behavior pertains to the study of elements influencing purchasing decisions
• These encompasses environmental, psychological, and societal factors
• Studying consumer behavior includes analyzing how consumers allocate limited resources, like income
• It explains concepts such as utility, preferences, and budget constraints
• Marketers can gain insights into consumer choices, thought processes, and emotional reasoning

Explanation of Producer Behavior

• Producer behavior involves studying how firms make decisions on production levels, input usage, and pricing
• Important concepts including production functions, cost structures, and profit maximization can be explored

Market Equilibrium Analysis

• The analysis studies the interaction of supply and demand across different market types such as perfect competition, monopoly, and oligopoly
• This is in order to determine the prices and quantities of goods and services
• Analysis will show how markets achieve equilibrium
• Analysis will understand the impact of changes in supply and demand.

Resource Allocation

• Resource allocation focuses on analyzing how resources, including labor, capital, and land, are distributed among various uses
• This is to understand the effects on production and consumption
• It is the process of scheduling resources like labor, materials, and equipment to complete tasks
• Organizations use resources to operate and carry out strategic projects
• Efficiency in resource allocation and the concept of Pareto efficiency are topics for scrutiny

Price Determination

• Knowing how prices are established in different market structures and the role of price in signaling and allocating resources is important
• There is exploration of how government interventions, like price controls, influence outcomes of the market
• It is the interaction of supply and demand that determines prices
• It determines or causes the market price level

Welfare Economics

• Welfare economics assesses the economic well-being of individuals and society
• It studies the effect of different economic policies on social welfare, equity, and efficiency
• Welfare economics also refers to the allocation of goods and resources
• This allocation is for promoting social welfare and an economically efficient distribution of resources
• Welfare economists seek to guide public policy which should result in the distribution being economically and socially beneficial for all

Market Failure Analysis

• Market failure analysis identifies situations where markets are inefficient, like externalities, public goods, and information asymmetry
• It provides a basis for policy recommendations with the purpose of correcting market failures and increasing economic efficiency
• Market failure is an inefficient distribution of goods and services in the free market
• The price of goods and services are generally determined by supply and demand in a free market
• Any change in supply and demand will change the equilibrium

Behavioral Economics

• Behavioral economics explores insights from psychology to understand deviations from rational decision-making
• It analyzes how cognitive biases, heuristics, and other psychological factors influence economic behavior
• In an ideal world, people would make optimal decisions
• Rational choice theory states people will choose the option that maximizes individual satisfaction when presented with options under scarcity
• People should be capable of making rational decisions
• This can be done by effectively weighing the costs and benefits of each option
• Rational people are unmoved by emotions and know what is best for them
• Behavioral economics explains that humans are not rational

Policy Formulation and Evaluation

• A framework is provided for designing and evaluating economic policies that improve market outcomes
• Analyze impact of taxes, subsidies, regulations, and other interventions on consumer and producer behavior
• Policy is the statement that provides for decision making by members of the organization charged with the responsibility of operating the organization as a system to achieve the establishment objectives
• Policies ensure a safe, organized, warm, friendly, hospitable, empowering, and non-discrematory workplace

Income Distribution

• Income distribution studies how income and wealth are distributed among individuals and groups
• The study of income inequality and the effects of redistribution policies
• Income distribution means how income is allocated among individuals or groups within a particular economy
• It helps understand disparities and economic inequalities in a specific market or region
• Worker E in the example earns 240 dollars, much more than the Worker A who earns 50 dollars which highlights an unequal distribution of income

Labor Economics

• Labor economics examines labor markets to gain an understanding of wages, employment, and labor productivity
• Labor economics explores labor supply and demand, human capital, and labor market policies
• Labor economics studies the labor force as an element in the process of production
• The labor force compromises the employed, employers, self-employed, and the unemployed
• It studies all that affects these workers before, during, and after their working lives
• It includes items such as childcare, education, pay and incentives, and pension reforms