Economicsas a

Business EnvironmentMaster of Business Administration

Welcome to

EnvironmentEnvironment

BusinessBusiness

EconomicsEconomics

Quantitative Quantitative MethodsMethods

Introductions . . .

Economics

Lecturer

Students

Economics & Statistics

ZEWZentrum für EuropäischeWirtschaftsforschung -

Mannheim

Peter SchmidtWho am I

market . research . culture

You are highly motivated students

have to carry your individual workload:Nr Date Unit / contents

1Mon, 27 April 2009

Section I: Introduction- 10 Principles of Economics (Mankiw); Basic Concepts of Economics- Chapter 1: Economics for Business

2Section II: Understanding Markets- Chapter 2: Consumers in the Market Place- Chapter 3: Firms in the Market Place (part I)

3- Chapter 3: Firms in the Market Place (part II)- Chapter 4: Markets in Action

4Section III: Competition and ProfitabilityChapter 5: Market structure and Firm PerformanceChapter 6: Strategic Rivalry

5Review Microeconomics and questionsSection IV: Domestic MacroeconomicsChapter 9 : An introduction to the macro economy

6Chapter 10: Measuring Macroeconomic Variables and Policy IssuesChapter 11: Fiscal and Monetary PolicyEconomic Theory and Policy: The IS/LM-Model

7Completion of chapter 11. Overview chapter 12: Supply Side Policies

8Section V Global EconomicsOverview chapter 13 Exchange Rates and the Balance of Payments and Chapter 14 GlobalizationReview, questions, exam preparation

(10) Principles of

Economics

Every field of study has its own terminology

Mathematics

axiomsintegrals

vector spacesPsychology

egoid

cognitive dissonanceLaw

torts

venues

Promissory estoppel

Every field of study has its own terminology

Economics

Supply

Demand

Elasticity

Consumer Surplus

Comparative advantage

Opportunity cost

Deadweight loss

Economics trains you to. . . .

Think in terms of alternatives. Evaluate the cost of individual and

social choices. Examine and understand how

certain events and issues are related.

The Economist as a Scientist

The economic way of thinking . . . Involves thinking analytically and

objectively. Makes use of the scientific method.

The Scientific Method

Uses abstract models to help explain how a complex, real world operates.

Develops theories, collects, and analyzes data to prove (or dismiss) the theories.

Observation, Theory and More Observation!

Ten Principles of Economics

Chapter 1

Copyright © 2001 by Harcourt, Inc.

All rights reserved.   Requests for permission to make copies of any part of the

work should be mailed to:

Permissions Department, Harcourt College Publishers,6277 Sea Harbor Drive, Orlando, Florida 32887-6777.

A household and an economy face many decisions:

Who will work? What goods and how many of them

should be produced? What resources should be used in

production? At what price should the goods be

sold?

Society and Scarce Resources:

The management of society’s resources is important because resources are scarce.

Scarcity . . .

. . . means that society has limited

resources and therefore cannot

produce all the goods and services

people wish to have.

Economics

Economics is the study of

how society manages its

scarce resources.

Economists study. . .

How people make decisions.

How people interact with each other.

The forces and trends that affect the economy as a whole.

Ten Principles of Economics

1. People face tradeoffs.

2. The cost of something is what you give up to get it.

3. Rational people think at the margin.

4. People respond to incentives.

I How People Make Decisions

5. Trade can make everyone better off.

6. Markets are usually a good way to organize economic activity.

7. Governments can sometimes improve economic outcomes.

II How People Interact

Ten Principles of Economics

Ten Principles of Economics

8. The standard of living depends on a country’s production.

9. Prices rise when the government prints too much money.

10. Society faces a short-run tradeoff between inflation and unemployment.

III How the Economy as a Whole Works