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Chapter 1 : Introduction to economics

1)Economy

2 definiton of economy : Economy and economics are not the same word

-Economy old definition : Houssehold management, or the management of household and especially expenses

Todays's : The system by which goods and services are produced sold, and bought in a country region with producers disrtibuters and consumers, in local regional or national community

-Economics : The study of economy and the factors affecting the economy

  It deal with production disrtibution and use goods and services

The science which study eco

It's important to study how ressources can be best disrtibuted to correspond to the needs of the bigest number of people

But people have unlimited wants, but the ressources are limited

1. The scarcity(manque) principle

We can't have everything, our wants exceed the needs available to satisfy them

People rich or poor always want more

Different tyoe of scarcity : Of ressources, of time , of information

Even if our money is not scars our time is scars, that's why we have to make a choice between what to consume and what to produce

The objective is to get the maximum of limited ressources

For exemple for parents it's like to choose between a good but expensive scool for there childrens or a free normal school

1. The cost-benefit principle

An individual should take an action if and only if the extra benefits from taking that action are at least as great as the extra costs

Like are we ready to pay to have better lessons in smaller classroom, or  free lessons in big classroom

1. Microeconomics and macroeconomics

Micro : How the economics decision individual people and individual buisnesses affect the larger economics system , specific domain

Macro  :Large-scale décision and issues at a national or global scale

Interest rates (taux d'intéret) ,unemployment,inflation,gross domestic product (gdp, pib en fr), the study of economic growth (croissance éco) and how govenment use money and fiscal policies to limit the bad size of recession

Chapter 2 : History of economics

1. In the middle ages

1. Thomas Aquinas

An Italian economic writer (1225-1274) , influenc by a grec philosopher , Aristote

Acording to Aristote treaders bring the rules, and merchent have to sell the price they bought the object

Aquinas thought that merchent deserve a return, they need payment for their own labours, the price you sell the object is the price you buy it plus the price of your work. Aquinas developed the idea of fair price , to him the price must be control

Price controls and other forms of market regulation were necessary to counterbalance selfish (egoiste) excesses

1. Antonius of Florence

An Italian friar (1389-1459)

It was the duty of the state to interven in mercantille affairs for the common good and to help the poor and the needy

1. Mercantilism

Dominant economic theory in modernized parts of  Europe between the 16th century and the 18th

It's an alliance between govenment and buisness, and govenment gave to regulate market and if it succed then there is and increase of national wealth (richesse) and state power . The wealth was gold and silver, and the govenment stimulat the production of domestic goods ans limit the domestic consumption (consommation) and also the government put tarifs on import so they are more expensive, and that reduce the consumption. So they try to crate a favourable balance of trade, More export than import

The aim of mercantilism: strengthen the economy and weaken foreign adversaries to imperialisim and many European war, they use money to build a strong army

JeanBaptiste Colbert, was minister of finance under Louis XVI (1661-1683)

Every aspect of economic prod was put under govenment control

-Companies possesed by the king

-Shipbuilders were subsidised (subventionner) by the state

-Ports were improved and canals builts

-French industry and commerce became matters of offical concern

-Industries that were threatened by foreign competition were defended by the state

The problem is that the cost were superior than the benefit

1. Classical Economy

 3.1. Adam Smith

 a Scottish economist (1723-1790) still influencal actually

 The Wealth of Nations (1776)  was his most important book and

  the centrepiece for the classical school.

 Smith conceptualised capitalism: each individual is free to pursue,to work their self-interest. not for the rest of the world. For Smith morality and economic are differents, he belived that in his economic behaviour, a man didn't want to promote the public interes, he wanted only to guarantee his own security

In favour of entrepreneurship and free market (opposite to mercanthilisme) to him the market self-regulates: prices are determined by supply and demand under competitive conditions.  

Competition prevents(prévenir) the economy from flying apart (partir dans tous les sens) = “the hidden hand of the market”

Example of “the hidden hand of the market” :

 A bookseller sells books at an exorbitant price

  Competitors will build bookshops.

 The bookseller has to lower the price or he will be driven out of business by competition.

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