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Questions and Answers
What concept involves dividing and subdividing tasks to increase production output?
What concept involves dividing and subdividing tasks to increase production output?
What is the primary benefit of specialization in production?
What is the primary benefit of specialization in production?
Which economic term refers to government spending and taxation policies?
Which economic term refers to government spending and taxation policies?
Which aspect does macroeconomics primarily focus on?
Which aspect does macroeconomics primarily focus on?
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What does the term 'economies of scale' refer to?
What does the term 'economies of scale' refer to?
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Which economist is associated with the ideas of division and specialization of labor?
Which economist is associated with the ideas of division and specialization of labor?
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Why might specialization make sense for workers?
Why might specialization make sense for workers?
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What is an essential characteristic of microeconomics?
What is an essential characteristic of microeconomics?
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What is a fundamental definition of economics?
What is a fundamental definition of economics?
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Which types of decisions does economics encompass?
Which types of decisions does economics encompass?
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What does scarcity imply about goods and services?
What does scarcity imply about goods and services?
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Which of these statements about economic systems is accurate?
Which of these statements about economic systems is accurate?
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What role do theories and models play in economics?
What role do theories and models play in economics?
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What is the purpose of assessing economics through midterm exams in the course?
What is the purpose of assessing economics through midterm exams in the course?
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What is the primary purpose of an economic theory?
What is the primary purpose of an economic theory?
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What is the significance of business challenges in economics education?
What is the significance of business challenges in economics education?
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Which of the following resources might be considered critical goods and services?
Which of the following resources might be considered critical goods and services?
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Which of the following best describes a traditional economy?
Which of the following best describes a traditional economy?
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In a command economy, which entity primarily makes economic decisions?
In a command economy, which entity primarily makes economic decisions?
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How do households interact with firms in the goods and services market, according to the circular flow diagram?
How do households interact with firms in the goods and services market, according to the circular flow diagram?
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Which statement accurately reflects a market economy?
Which statement accurately reflects a market economy?
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What do economic models primarily test?
What do economic models primarily test?
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Which of the following is NOT a characteristic of a command economy?
Which of the following is NOT a characteristic of a command economy?
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What is a key feature of households in the labor market?
What is a key feature of households in the labor market?
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What is the primary determinant of supply in a market?
What is the primary determinant of supply in a market?
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Which factor distinguishes a mixed economy from a purely market economy?
Which factor distinguishes a mixed economy from a purely market economy?
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What role do regulations play in a market economy?
What role do regulations play in a market economy?
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What is one major characteristic of globalization in markets?
What is one major characteristic of globalization in markets?
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How does the U.S. economy primarily distinguish itself in terms of market orientation?
How does the U.S. economy primarily distinguish itself in terms of market orientation?
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What are exports in the context of international trade?
What are exports in the context of international trade?
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What economic concept is defined as the measure of total production in an economy?
What economic concept is defined as the measure of total production in an economy?
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Which statement best describes a command economy?
Which statement best describes a command economy?
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Study Notes
Sustainable Economics
- Vilnius University Business School is offering a course on Sustainable Economics
- The course covers assessment strategies, microeconomics, macroeconomics, and international economics/trade.
- Assessment includes a mid-term exam on Microeconomics (November 21), a mid-term exam on Macroeconomics, International Economics, and Trade (December 5), and a business challenge (January 9).
- The course will cover principles of economics, 3rd edition, (Greenlaw, Shapiro, & MacDonald, 2022)
Introduction to Sustainable Economics
- Assessment strategy includes a mid-term exam of Microeconomics (November 21), a mid-term exam of Macroeconomics, International Economics, and Trade (December 5), and a Business Challenge (January 9).
- The overall weight for assessment is 100%
- Microeconomics constitutes 30% of the assessment
- Data extraction and visualization accounts for 5% of the assessment
- Macroeconomics, International Economics, and trade account for 35% of the assessment
- Business challenge comprises 30% of the assessment.
Principles of Economics 3e
- The textbook used is "Principles of Economics 3e" by Greenlaw, Shapiro, and MacDonald (2022).
- The book is available online at https://openstax.org/details/books/principles-economics-3e
Welcome to Economics!
- The course will be covering What is economics, and why is it important?
- Microeconomics and macroeconomics
- How economists use theories and models to understand economic issues
- An overview of economic systems
What Is Economics, and Why Is It Important?
- Economics is the study of how humans make decisions in the face of scarcity.
- Scarcity means human wants for goods, services, and resources exceed what is available.
- Examples of scarcity include critical goods and services—not everyone has access to them.
- Resources are used to gain goods and services and people must make decisions on how to use them
The Problem of Scarcity
- Discussion question: What are examples of critical goods and services? Does everyone have them? How do you get those items?
- Choices must be made when resources are used to obtain goods and services
- Resources must be used efficiently
- People must decide if production will meet all their needs or if trading will be necessary.
- Division and specialization of labor is needed to increase production
Comprehensive Study of Economics
- Adam Smith introduced the idea of dividing labor into discrete tasks in his 1776 book, "The Wealth of Nations."
The Division of and Specialization of Labor
- Division of labor is the way workers divide required tasks to produce a good or service.
- Workers on an assembly line illustrate division of labor
Why the Division of Labor Increases Production
- Dividing and subdividing tasks increases output for production
- Specialization occurs when workers or firms concentrate on specific tasks they are good at.
- Specialization allows workers to become quicker and more proficient
- Specialization leads to economies of scale where increased production decreases per unit cost
- Specialization only works when workers' wages enable them to buy the things they need.
Microeconomics and Macroeconomics
- Microeconomics is concerned with the well-being of everyone including people with jobs or no jobs and high or low incomes.
- Microeconomics focuses on the individual actions of households, workers, and businesses.
- Macroeconomics focuses on broad issues such as economic growth, unemployment, inflation, and trade balance.
Other Economic Terms
- Monetary policy involves altering interest rates, credit availability, and borrowing.
- Monetary policy is determined by a nation's central bank.
- Fiscal policy involves government spending and taxes.
- Fiscal policy is determined by a nation's legislative body.
How Economists Use Theories and Models to Understand Economic Issues
- John Maynard Keynes was a highly influential economist.
- Keynesian economics teach understanding rather than just facts
- Economists use theories and models based on human behavior assumptions to analyze economic issues and problems.
Economic Theories and Models
- A theory is a simplified representation of how variables interact.
- Theories aim to simplify complex real-world issues into understandable essentials.
- Theories must be complex enough to demonstrate key features.
- Models test theories, and the terms model and theory are used interchangeably in the syllabus.
Circular Flow Diagram
- The circular flow diagram depicts how households and firms interact via goods/services markets and labor markets.
- Households receive goods/services and pay firms, and firms pay households for labor.
How Economies Can Be Organized: An Overview of Economic Systems
- Traditional economies are based on agriculture, and practices are inherited and unchanged.
- Traditional economies are common in parts of Asia, Africa, and South America and occupations are focused within families.
An Overview of Economic Systems
- Command economies have a controlling government.
- The government controls what is produced, prices, and the methods used to produce products.
An Overview of Economic Systems
- Market economies are decentralized.
- Individuals/groups own resources.
- Businesses use demand and supply to provide goods/services as buyers and sellers interact.
- Market forces (not governments) determine economic decisions.
Real World Economies
- Most economies are mixed; combining different economic systems (command, traditional, and market).
- The U.S. economy is geared toward the market-oriented end of the spectrum.
- Countries in Europe and Latin America tend to have more government involvement than the U.S.
- China and Russia tend to have more command-oriented economies compared to market-oriented economies.
Regulations: The Rules of the Game
- There is no truly free market; regulations always define economic rules.
- Market-oriented economies typically have fewer regulations.
- Heavily regulated economies may have underground economies (black markets) where transactions occur without government approval.
- Balancing market freedom with appropriate government rules is key in many economies
The Rise of Globalization
- Globalization is the increasing trend of buying/selling across national borders.
- Exports are domestically produced goods sold abroad.
- Imports are goods/services produced abroad that are sold domestically.
Self-Check Questions
- Includes questions dealing with scarcity, economic decision-making, economic systems, and the effects of globalization.
Studying That Suits You
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Description
Explore the Sustainable Economics course at Vilnius University Business School. This course covers essential topics such as microeconomics, macroeconomics, and international trade, along with a detailed assessment strategy. Prepare for mid-term exams and a business challenge while applying principles from the latest economics edition.
