Primary Overview of Business Economies

1. Business Economics
Md. Shams Akhter
Id N0-16012026

2. Topics to be Discussed
2
Economics
Branches of Economics
Business Economics
Basic Concepts in Business Economics
Trade-offs
 Opportunity costs
 Marginal analysis,
 Time perspective,
 Discounting Principle
 Efficiency and Productivity etc.
 Model

3. 3
Our F
The Circular-Flow Diagram
The Circular-Flow Diagram: a visual model of the
economy, shows how dollars flow through markets
among households and firms
Two types of “actors”:
households
firms
Government
Two markets:
the market for goods and services
the market for “factors of production”

4. 4
FIGURE 1: The Circular-Flow Diagram
Households:
 Own the factors of production,
sell/rent them to firms for income
 Buy and consume goods & services
Households:
 Own the factors of production,
sell/rent them to firms for income
 Buy and consume goods & services
HouseholdsFirms
Firms:
 Buy/hire factors of production,
use them to produce goods
and services
 Sell goods & services
Firms:
 Buy/hire factors of production,
use them to produce goods
and services
 Sell goods & services

5. 5
FIGURE 1: The Circular-Flow Diagram
Markets for
Factors of
Production
HouseholdsFirms
IncomeWages, rent,
profit
Factors of
production
Labor, land,
capital
Spending
G & S
bought
G & S
sold
Revenue
Markets for
Goods &
Services

6. 6
FIGURE 1: The Circular-Flow Diagram
Markets for
Factors of
Production
HouseholdsFirms
IncomeWages, rent,
interest, profit
Factors of
production
Labor, land,
capital
Spending
G & S
bought
G & S
sold
Revenue
Markets for
Goods &
Services
Govt.

7. Production Possibility Frontier
P0sssibilities Rice (thousand metric tons) Cloth (thousand)
A 0 15
B 1 14
C 2 12
D 3 9
E 4 5
F 5 0
THINKING LIKE AN ECONOMIST 7

8. THE MARKET FORCES OF SUPPLY AND
DEMAND 8

9. Branches of Economics

10. Microeconomics vs Macroeconomics
V
S

11. THINKING LIKE AN ECONOMIST 11

12. THINKING LIKE AN ECONOMIST 12