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1、PAGE PAGE 10Pavanes Ecoonomiccs Nottes4th Feeb 20009Economiics iss the studyy of hhow wee use our llimiteed meaans too satiisfy oour unnlimitted waants.Limitedd Meanns Alll peoople hhave llimiteed timme, skkills and mmoney so thhey haave too makee choiices tto howw to uuse thhem too the best advannt

2、age for tthem.Choice SSince we caant hhave eeverytthing we waant ass we hhave llimiteed meaans wee havee to mmake ddecisiions. (Deciisionss betwween aalternnativees)Opportuunity Cost TThe neext beest allternaative forgoone whhen a decission iis madde.5th Feeb 20009Opportuunity costUnlimitted waantsC

3、hoiceScarcittyLimitedd meannsThe ecconomiics prroblemm is sscarciity. TThis mmeans that we haave liimitedd meanns butt unliimitedd wantts. Beecausee of tthis wwe havve to make a chooice. Everyy choiice haas an opporrtunitty cosst.Needs TThose thinggs we requiire inn ordeer to sustaain liife.e.g. ffo

4、od, clothhing aand shhelterrWants TThingss we ddesiree to mmake oour liife moore ennjoyabble.e.g. ccell pphone, sterreo, SSPAWants changge as we geet oldder beecausee our tastees chaange aand neew thiings aare inntroduuced aas tecchnoloogy immprovees.Unlimitted waantsLimitedd MeannsScarcittyChoiceOp

5、portuunity cost17th FFeb 20009Values CCore bbelieffs or princcipless thatt inflluencee yourr deciisionss.HonesstyInteegrityyFairr-traddingConssideraation of otthersInfluennts onn valuues:Culturre, Enviironmeent, Educcationn, Upbrringinng (Faamily)Internnet, FFinancceDemand DDemandd is tthe ammount o

6、f a good or seervicee thatt a peerson is wiillingg and able to puurchasse at each pricee.The laww of DDemandd: AAs thee pricce of a goood or serviice riises, the qquantiity deemandeed fallls orr as tthe prrice ffalls the qquantiity deemandeed inccreasees, ceeteriss pariibus. Ceteriss pariibus AAll o

7、tther ffactorrs remmain cconstaant.17th FFeb 20009Hughs weeklly Quaantityy Demaanded scheddulePrice $Quantitty demmandedd0.50301.00201.50122.007TTitle is cllear sstartiing whhat thhe graaph shhows aand thhe timme perriod.AEven aand appproprriate scalee on yyour aaxis.LLabel axes with item and uunite

8、.PPlot yyour ppointss and join them usingg a ruuler.22nd FFeb 20009Determiinantss of DDemandd Influeents, otherr thann pricce, thhat wiill innfluennt thee amouunt coonsumeers ppurchaase.IncoomeTastte/ FaashionnPricce of substtituteesPricce of Compllementtary ggoodsSeassonsSubstittuteGoods that can b

9、be useed to insteead off otheer gooods.e.g. bbutterr and margaarine : Iff the pricee of bbutterr incrreasess, morre peoople wwill bbuy maargariine ass it iis rellatingg cheaaper.ComplimmentsGoods that are uused ttogethher.e.g. DDVDs aand DVVD plaayers : Whhen prrice oof DVDD playyers ddecreaase thhe

10、re iis an increease iin demmand ffor DVVDs.Change in Deemand CChangee in ddemandd is ccause by a changge in deterrminannts annd willl ressult iin a mmovemeent off the entirre demmand ccurve.e.g. DDecreaase inn Demaand : the ddemandd has decreease aat eacch priice.4th Maar 20009Demand SchedduleA tabl

11、ee showwing tthe quuantitty of a goood or serviice thhat coonsumeer is williing annd ablle to purchhase aat varrious pricees, inn a giiven ttime pperiodd, cetteris paribbus.16th MMar 20009Inferioor Gooods TThey aare pooorer qualiity gooods tthat yyou wiill buuy lesss as your incomme risses. e.g. cch

12、eap cuts of meeat innsteadd of ssteakNormal Goodss GGoods that you wwill bbut moore ass yourr incoome riises.Necessiities TThingss needded too susttain llife. Necesssitiees aree usuaally nnormall goodds so you wwill bbuy moore ass yourr incoome riises.Luxuriees IItems not nneededd but make your life

13、 more enjoyyable. Housseholdds on low iincomees speend a smalll propportioon of theirr incoome onn luxuuries. As aa housseholdds inncome risess theyy spennd a ggreateer prooportiion off theiir inccome oon luxxuriess.Househoold AA persson orr grouup of indivvidualls (faamiliees, fllat maates) livinng

14、 toggetherr undeer onee rooff.Aggregaate Hoousehoold Exxpendiiture TThe sppendinng of all hhousehholds takenn as aa singgle grroup.Averagee weekkly Exxpendiiture for aall hoousehoolds 22001Expendiiture Groupp$ Spendd%DegreeFood124.9016.4759Home owwnershhip annd rennt181.0023.8786Clothinng andd foott

15、wear24.503.2312Househoold opperatiion97.0012.7946Car ownnershiip andd runnning120.7015.9257Other ggoods85.0011.2040Other sservicces125.3016.5260Total758.4019th MMar 20009Spendinng Pattternss AAs a ppersonns inncome increeases they may sspend more moneyy but they generrally will save moree.g. IIf a p

16、personn earnns $10000 annd savves $1100, hhe speends 990% annd savves 100%. Iff his incomme inccreasees to $12000, he spendds $10020 (885%) aand saave 1880 (155%). TThe ammount he sppend hhas inncreassed buut as a perrcentaage off his incomme hass falllen. TThe peercenttage oof thee saviings hhas in

17、ncreassed.Consumpption TThe sppendinng on goodss and serviices.Group1- Basiic Neccessitties-For hhousehhold wwith llow leevels of inncome spendd mostt of ttheir moneyy on tthis ggroup with a litttle bbasic serviices aand evven smmallerr luxuuries. Theyy havee no ssavinggs.Group2- Basiic Serrvicess-A

18、ll llevelss of iincomee mainnly inn low-levell incoomes uuse thhis.Group3- Luxuury gooods aand seerviceesThis iss for houseeholdss withh highher leevel oof inccome aas theey aree ablee to aaffordd moree and betteer quaality produucts/sservicces.Group4- Saviings- Savvings is whhat hoousehoolds wwith hhigh iincomee leveels doo as tthey hhave mmoney left afterr buyiing neecessiities and nnormall goodds.Graph-This g

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