2. Sem. - Introduction to Economics an der Hochschule Aschaffenburg

the quantity demanded decreases with an increase in price 𝜕𝑋𝑖/ 𝜕𝑃𝑖 < 0

Labor- the human input that goes into production.
Land- all the natural resources of the earth.

Capital- the equipment used to produce goods and services (not financial).
(Human capital- training, eductional achievement and skills that make a worker
productive.)

A want is the lack of something a person would like to have.

Goods (and services) are the means to satisfy the wants.

Problem: Human wants are unlimited and there is only a limited amount of goods
available.

A monopoly has the ability to influence the price of its output, whereas a competitive firm
takes the price of its output as given by market conditions

Models → theoretical construct representing economic processes

• Carefully define the economic problem in questions.
• Use assumptions to blend out irrelevant aspects of reality.
•  Analyse the model behaviour.
• Derive a hypothesis.
• Empirically test the hypothesis.

Principle #1: People face tradeoffs. (Kompromiss eingehen) - Follows from the scarcity of goods
Prinicple #2: The cost of something is that you have to give up to get it (opportunity cost: utility of alternative uses of resources, what you have to
give up in order to get) e. g. If I go to the University I cant earn money while working.
Principle #3: Rational people think at the margin. (Grenzdenken) - Its better to have something rather than nothing. An Airline should sell a last-minute ticket for 300€ rather than the average cost of 500€ because its more profitable than flying with empty seats.
Principle #4: People respond to incentives. (reagieren auf Anreize)
Principle #5: Trade can make everyone better off. (specialize on things you can do compartively better than others)
Principle #6: Markets are usually a good way to organize economic activity
Principle #7: Under special circumstances (bes. Umsände) governments can
improve market outcomes

Positive analysis tries to describe economics phenomena without resources to
values. It describes how the the world is

Normative analysis tries to develop optimal solutions for economic problems
starting with given objectives based on values. It describes how the world ought to
be.

What amounts of which goods are being produced?
How are they produced and by whom?
How are the goods distributed(verteilt) to the members of the society?

Distributive Market Failure ... means, that the society is rejecting the market result on moral reasons , i.e. claiming that markets are not „just“ or “fair”

Productivity is measured as output per unit of factor input (e.g. quantity of goods produce per hour of labor input)

the quantity demanded increases with falling income 𝜕𝑋𝑖/ 𝜕𝐵< 0