TOPIC 1 BASIC ECONOMIC CONCEPTS
Three fundamental questions which the general economics is called upon to answer: what
shall be produced? how to produce? produce for whom?
The people's needs and the problem of their classification (the fundamentals of the
marginal utility theory). Production activity as the main way of meeting the needs.
Production factors, productive forces, the means of production, the instruments and the
objects of labor. Production technologies, the production function. Production costs and
the problem of their measurement.
Production efficiency as the attainment of the set goal with the minimal costs. The
problem of limited resources and the production-possibility curve; the law of diminishing
returns of the factors of production, the concept of a "trade-off" and "opportunity costs".
Division of labor and its main forms (in singular and social). Technological progress.
The process of reproduction as a unity of production, exchange, distribution and
consumption. Economic (production) relations and the subjects thereof.
Interest as a motive force of the economy. The concept of an economic
system. Property and its role in forming an economic system.
Fundamental features of the centrally planned economy and market economy. Mixed
Microeconomics as a section of general economics, dedicated to the analysis of specific
commodity markets' functioning. The normative and positive aspects in the science of
TOPIC 2 ECONOMI ANALYSIS TOOLS
The concept of an economic model (theory) as the chief tool for disclosing the main
economic relationships. The role of abstraction (simplifying assumptions) in forming
economic models. Incremental sophistication of models as a manifestation of the
universal method of scientific study that consists in the advancement from the abstract
to the concrete. A model as a scientific hypothesis before the comparison of
conclusions flowing therefrom with the facts of real life. Economic models and their
verification against concrete data. Characteristics of the main types of data used in
economics: time-series data, grouping of data. The method of index for data
representation. Nominal and real variables in the economic analysis. The tradition of
using a graphic interpretation of economic models in microeconomics and
macroeconomics. The method of comparative statics, its advantages and limitations.
TOPIC 3 A GENERAL DESCRPTION OF SUPPLY, DEMAND AND
EQUILIBRIUM IN THE COOMODITY MARKETS
Demand and supply as factors of the price function. Supply and demand curves. Factors
that determine the position of the demand curve (prices of "tie-in sales", consumer
incomes, consumer tastes). Factors that determine the position of the supply
curve (production technology, prices of goods used in production, government
regulation). A graphic representation of market balance. Free markets and price control.
TOPIC 4 DEMAND. THE INFLUENCE OF PRICES AND INCOME ON THE
Price sensitivity of demand. Easiness of substitution as the main factor affecting the price
demand elasticity. The employment of the price demand elasticity indicator for
determining the amount of products supplied to the market that maximizes the consumers'
general expenditures on their purchasing. The concept of cross-elasticity of demand.
Income demand elasticity and the classification of goods into normal goods (including the
necessary goods and luxury goods) and goods of inferior quality. Inflation affecting
TOPIC 5 CONSUMER CHOICE THEORY
Main elements of the consumer choice theory (consumer income, prices of goods,
consumer tastes, as well as the assumption of maximum efficiency consumer behavior).
Budget restraint and the budget curve. Consumer tastes and the concept of the substitution
of one good for another.
The basis behind the diminishing marginal rate of substitution assumption and the
indifference curve map. The mechanism of utility maximization by the consumer.
The changes in the consumer choice due to changes (a) of income, (b). of the prices of
goods. The concept of the substitution effect and the effects of a changing real income in
the situation of relative prices' changes. The Griffen good. Diminishing
character of the individual demand curve for most goods. The market curve of demand for
goods as a result of a parallel addition of its individual curves.
TOPIC 6 PRODUCTION. ORGANIZATIONAL FORMS AND BASIC
Organizational forms of enterprises: firms founded on the basis of individual