EMPRENDEDORES

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WHAT WOULD BE LIFE IF WE DONT HAVE THE COURAGE
TO TRY SOMETHING NEW? Vincent Van Gogh
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1st Year ECONOMICS Todays Agenda

• History and evolution of economics
• Society and the economic problem.
• The economic process

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History and evolution of Economics

• ECONOMICS is a Social Science that evolves as
  humanity does
• It concerns with Human relations, human behaviour
  and human interactions with nature and its
  environment.
• It appears when Humans appear.

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The main Human problem is ECONOMIC
Economic Decision
RESOURCES
Transform into goods and services.
NEEDS
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In the begining...

• Primitive men satisfied their needs through
  hunting and fishing, using caverns as shelter and
  animal furs for dressing.

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Social Cooperation

• In the way that people satisfied their needs
  individually they realize that with cooperation
  with others the results could be better. (Tribal
  societies nomads).

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Sedentarism

• Some groups found that there were fertile places
  to cultivate crops and learned to domesticate
  animals. The use of metal and stone tools helped
  to do so. (Small comunities and self production
  and consumption.).

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Overproduction and exchange Market is born.

• Some regions are better for some products than
  others. The exchange process begins . (barter)

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FIRST CURRENCIES

• The origin of the currencies is based on a good
  that is scarce and, in general, is useful for
  everyone.
• SALT
• CACAO (cocoa)
• silver, gold, (scarce)
• jewels (jade).
• The coins came up as a way to exchange goods and
  services.

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From there on...

• With the excess of production began economic and
  political power relations.
• Refer to.
• Old Testament Empires, slavery, relations
  between casts and classes.
• Greeks Plato and Aristóteles observe the
  economic process into filosofy and ethics. The
  definition of State and cities...
• Middle Age in Europe. Feudalism Monarchy,
  Landlords, artisans. Slaves

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From the middle age to our days.

• XVI and XVII Centuries.
• The debates of how to produce within people
  continued.
• In order to raise the monarchic incomes (gold,
  trade) Mercantilists

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1776 An Inquiry into the Nature and Causes of
the Wealth of Nations, byAdam Smith.

• This book was published in 1776, at a time when
  the power of free trade and competition as
  stimulants to innovation and progress was
  scarcely understood.
• Governments granted monopolies and gave subsidies
  to protect their own merchants, farmers and
  manufacturers.
• Artisans of one town were prevented from
  travelling to another to find work. Local and
  national laws forbade the use of new,
  labour-saving machinery. And, not surprisingly
  to us today, poverty was accepted as the common,
  natural, and inevitable for lots of most people.

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The industrial revolution

• Allows the use of machinery to transform
  resources and produce goods and services.
• Markets developed and so did the labor forces and
  production procedures.
• The French Revolution permited more access to
  resources, political power and economic means to
  produce.

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The world got divided

• Communism
• Planned Economy The State distributes the scarce
  resources into the society.
• Society should not have differences in classes.
• Refers to exploitation of the workers.
• The state owns the factors of production. (FOP)
• Common wealth is above individual wealth.
• Marx, Engels.

• Capitalism
• Market Economy Supply and Demand is the best way
  to assign the scarce resources.
• Private property of the FOP.
• Critic to colectivism and social properties of
  FOP.
• The individual right is above the colective
  rights.
• Hayek, Von Misses, Austrian School.

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Contemporary and modern age

• Frontiers opened and international trade develops
  more.
• Poverty, underemployment, inequallity, and lack
  of opportunities rise in LDC.
• Plastic and virtual currencies.
• Comunication and technology as a mean for
  businesses.
• Economies of scale, societies of consumption.
• The importance of invest in human and social
  capital
• Globalization
• Environmentlan and ethics concerns

Economics keep evolving
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II PARTECONOMICS

• The basic economic questions are
• With limited resources and the unlimited needs
• What will be produced? Literally billions of
  different things could be produced with society's
  scarce resources How to produce?
• How will it be produced? How, in some way, are
  decisions to be made as to the particular mix of
  inputs, the way they should be organized and how
  they are brought together at a particular place?
• For whom will it be produced? Once a commodity is
  produced, who should have it? the question then
  is what mechanism there is to distribute income,
  which then determines how commodities are
  distributed throughout the economy.

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Economics
DEFINITION

• "the study of man in the ordinary business of
  life". (Alfred Marshall XIX century)
• the branch of social science that deals with the
  production and distribution and consumption of
  goods and services and their management
  (Princeton University)
• The social science that deals with the
  production, distribution, and consumption of
  goods and services and with the theory and
  management of economies or economic systems. web
  dictionary.
• The study of how to use our limited resources to
  satisfy our unlimited wants as fully as
  possible.(William Rohlf)

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Fields of Economics

• Economics has many direct applications in
  business, banking, personal finance, human
  behavior, social, environmental, development and
  government issues.
• Economic in everyday concerns i.e.
  Freakonomics by Steven Levit.
• The field may be divided in several different
  ways, most popularly
• microeconomics (at the level of individual
  choices) vs macroeconomics (aggregate results),
• also positive vs. normative,
• and by subfield.

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MICROECONOMICS

• Deals with individuals consumers and firms.
• How they interact in the markets.
• How the markets operate (Supply, Demand, prices)
• Groups of firms or groups of consumers.

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MACROECONOMICS

• Study the economy as a whole.
• Governments have macroeconomic goals in order to
  maintain the well being of the society
• Growth
• Price Stability over time
• Employment
• Income distribution
• External sector in equilibrium

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POSITIVE / NORMATIVE concepts in Economics

• Positive or descriptive (objective)
• Is a statement that describes an economic
  situation using the economic theory and data as
  it is.
• I.E. Poverty
• Poverty is a situation in which people are not
  able to solve their minimal subsistence needs.
• Poverty is measured by people who have an income
  below 1 daily.
• Normative (subjective)
• Is a statement of an economic situation based on
  opinion based on a rule. What it should be.
• It involves values judgments. (good or bad,
  positive or negative)
• I.E. Poverty
• Poverty should be reduced educating the labour
  force by the government
• Poverty should be reduced by letting the firms
  to operate without government intervention.

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HOMEWORK

• Read Chapter 1 Green Book.
• Next class. Reading quiz next Wednesday.