Economic Systems (Week Two)

DEFINITION

-An economy system was operation without government intervention.

FEATURES

- Decisions decided by individual and firm ONLY.

- Land and capital are privately owned.

- The price mechanism changes in price in response to change in demand and supply have the effect of making demand equal to supply.

ADVANTAGES

- Individual free to make their own economic choice

- Freedom to workers and firm to choose where to work and what method to use for production.

DISADVANTAGES

- Existence of wide gap between the rich and the poor

- Existence of unemployment problem

Planned Economy

Definition

• Fully controller by government.

Features

• Decision are taken by government or central authorities.
• Land and capital are collectively owned. The government or central authorities plan the allocation of resources.

Advantages

• Decision of allocation of resources always are in the interests of society as a whole and with specific national goals.
• Unemployment could be largely avoided if the government carefully planned the allocation of labour.
• Same income distribution.
• Produces the goods and services at efficiency level.

Disadvantages

• Mistake decide in economy (decision made by some people only).
• Technology and innovation are undeveloped because all production are decided by government.

Mixed Economy

Definitions

 A economy system that incorporates a mixture of private and government ownership or control(capitalism and socialist).

Features 

# This system use market mechanism and allow government intervention in economy activities.

# Price level determine by price's mechanism but basic economy's problem resolved together between government and private.

# Individual and firm free to have properties.

Advantages

# The government will try to reduce gap of income between rich and poor people(taxes and subsidies).

# Government will control the existence of monopolies.

Disadvantages

# Business freedom is not totally offered for enterprise.

Islamic Economy

Definitions

Economy which uses Allah's creation natural resources with most efficient and fair way based on Islamic laws.

Features

* Al Quran and Hadith was the main sources in Islamic economics' activities.

* Individual free to own property 

* Individual no give priority to profit in business

* Fair competition permitted 

* Free to decide in economics

Advantages

* Good in the world and afterworld 

* Free competition

Factor of production (Week Two)

DEFINE Factors of Production

Factors of production are the basic resources used in the production proses in order to produce economic goods or services







Production Possibilities Curve (PPC)

PPC show the maximum combination on goods that can be produced given the available factors of producion and the available technology of production.


Purpose to using PPC is;
-To undestand the concept of scarcity and constrained choice.
-To emphasize the distinction between movements along PPC and shifts the PPC
-To show the concept of opportunity cost using the PPC model.



                                                       Assumptions to build the PPC;
                                                      -Only two goods will be produce
                                                      -The production of technology is available and 
                                                        not changes
                                                      -Limited factor of production
                                                      -Economy has achieved level of full employment



Attainable and unattainable combination

i) Attainable and efficient combination

     Attainable where resources are fully utilized and  the country said to be at full employment level. The firm is also to be efficient (no waste in the use of resources)

ii) Attainable but not efficient combination

     Combination inside the PPC is attainable because it can be produced, but the economy not efficient and the resources are not fully utilized (unemployment exist)

iii) Not attainable combination

      Combination outside the PPC is not attainable because it situated outside the PPC. It cannot producing cause not enough of resources and no new technology.

iv) Extreme combination

         Extreme combination is combination can be produced and it efficient but all resources will use for produce only one goods.

Change in production possibilities curve

Due to several factors PPC can increase or decrease. It occur for one side only, or both. 

a) Increasing in population

     

Manufacturers will increase the volume of goods when there is increasing of population. Production of both goods will increase. This cause PPC shift to right.










b) Technology progress


                                    


The factor can shift the PPC outward through an improvement of technology. Based on diagram above, technology happened only in producing books, the economy will produce more books than wagons. So, the PPC will shifted right.

Week Two

Basic economics Concepts  

                               
Scarcity

   The factors of production are limited, The amount of output of production also limited

                                                                    

                                                             Choice                                                          

Limited resources, unlimited demand. A choice made among several wants which involves some trade off known as opportunity cost.          


      Opportunity cost   

                           The value of the best alternatives foregone when a choice is made.                                                                                                                                                                       

     

Chapter One (Week First)

Assalamualaikum.

Last few days, we started our first class. And we just learn about first topics, 

The topics is about The Introduction of Economics

We learn basic as been told by our lecturer. The situation just relax and easy going.

Do you know about Economics? If yes, please leave a comment on the box below. If you are not sure, try to scroll down this page to know the definition of economics. Good Luck!

Definition of economics

• social research about individual and society attitude to contribute and distributed the limited factors of production to produce to produce the unlimited demand of the goods and services .
• Economics have two types :

                                 :) MICROECONOMICS

                                 :) MACROECONOMICS

MICROECONOMICS

microeconomics studies individual economics, units, such as a household, a firm and a government.

• micro means looking closer into small units 
• microeconomics provides an outline for choise and decision making of an individual , a busines and the public at large

MACROECONOMICS

macroeconomics studies the aggregate behavior of the entire economy

• study the gross domestic product, the national income , inflation, deflation, unemplyement, public finance , the trade cycle , the international trade and others.

POSITIVE AND NORMATIVE ECONOMICS SYSTEM
     


    Positive economy statement
      Statement which based on facts and not value judgement.Can be      tested and verified
      

       Example :

                Government - provided healthcare increases public expenditures         

    Its a positive economic statement, because it can be proved or disproved by exammining healthcare spending data in countries like Canada and Britain where the government provides healthcare                                                                                                                                                                          

       Normative economy statement                              

       Statement which is bases on value judgement and on personal         opinion.Cannot be tested.

       Example :-

               Government should provide basic healthcare to call citizens        

There is no way to prove whether government 'should' provide healthcare,this statement is based on opinions about the role of government in individuals lives, the importance of healthcare and who should pay for it                                                                                

First Task

Assalamualaikum.

This is our first task for this sem. Subject Microeconomics. Our group members, Shaa, Lin and Alin

We have been asked to create a blog and every time after lesson, we must update the input that we learn to this new life (i means, blog). Haha.

Have u heard about this subject?

Of course! You are not! If you taking other course. Hehehehe, gotcha 

And honestly, I don't bother to create this blog since i got more than two blogs. But, my problem is we must type the information totally in english. And english for me, is not okayyyyy cause i'm not good especially at grammer. Please don't laugh otherwise, this blog gonna not active. Hahaha. Definetly not, just kidding. 

Soooo, Hello guys. I hope we can be friends and meet someday.

Hopefully, this blog can helps you to find what you need. Just scroll others entries to search for it. Good Luck!

Its late already, time to eat. Hehehehe. Walla...