Principles of Economics: Grace Lee Hooi Yean and et al. (2019)

The professors and lecturers who authored these chapters committed themselves to producing a relevant, easy-to-read, up-to-date textbook on economics—and that’s exactly what they did. The book is suitable for students' first course in economics, whether in undergraduate or master’s programmes.

The thirty-four chapters, covering subjects in microeconomics and macroeconomics, include practical instruction in the fascinating discipline of economics.

The book features case studies and review questions, designed to stimulate students’ critical thinking and problem-solving. The case studies chronicle real-life situations and predicaments faced by companies, entrepreneurs, and economists.

The authors include faculty members from public and private universities across Malaysia, all of whom have extensive teaching and research experience. Their goal was to write a textbook which is exciting and beneficial. Students will judge whether they succeeded.

ISBN 978-967-13440-7-1 (Hardback)
ISBN 978-967-13440-8-8 (Paperback)



About the Authors



Grace Lee Hooi Yean is an Associate Professor of Economics and Head of the Department of Economics at Monash University Malaysia. Grace has over eighteen years of teaching experience in the field of Economics. She has taught courses in economics to undergraduate and post-graduate students. In addition, Grace is the external reviewer for various programmes offered by private universities in Malaysia. Her principal areas of interest are applied economics, experimental economics and social economics. She has supervised many honours and PhD students in the said areas. Grace has been involved as the principal investigator of World Values Survey for Malaysia (Wave 6 and 7). Her research findings have been presented at international conferences and published in highly-ranked international journals such as Applied Economics, Economic Modelling, Public Choice, Journal of Asian Economics, Journal of the Japanese and International Economies and Journal of the Asia Pacific Economy. In addition, she is also a panel member of the Institutional Evaluation Panel for External Research Grants at Monash University. Grace has received various Teaching Prizes and PVC’s Awards for Excellence in Teaching and Research. Prior to her academic profession, she was a business consultant in a multinational consultancy firm.





Lim Hock Eam is an Associate Professor from the School of Economics, Finance and Banking, Universiti Utara Malaysia, and currently is associate fellow at the National Higher Education Research Institute, Malaysia. He obtained his PhD from Monash University. His areas of research interest include labour economics, the economics of happiness, applied micro-econometrics, and the economics of education. He is actively involved in various research projects and publishes extensively in local and international journals.





Evan Lau is a well-trained Universiti Putra Malaysia graduate with vast experience and research excellence covering the areas of International Economics, with numerous applications of econometrics techniques. Recently he ventured into the socioeconomic discipline, including Economics of Crime and Suicide. He joined the Faculty of Economics and Business at Universiti Malaysia Sarawak (UNIMAS) in 2005, soon after completing his PhD. He served as a senior lecturer beginning in 2008 and was promoted to Associate Professor in June 2014. At present he is the Deputy Dean for Research and Postgraduate Studies in the Faculty of Economics and Business. He is the Managing Editor of the International Journal of Business and Society (IJBS), a post he has held since 2005. He is also the Director of the Centre for Business, Economics and Finance Forecasting (BEFfore), UNIMAS, which serves as a platform and reference point for business, economic and finance forecasting. He was a Visiting Scholar in the Faculty of Economics at the University of Cambridge from October 2013 – April 2014.





Audrey Siah Kim Lan is a Lecturer of economics and coordinator of the Department of Economics with Monash University, Malaysia. Audrey has over ten years of teaching experience in the field of Economics. She has taught courses in economics to undergraduate and postgraduate students. Her principal areas of interest are international economics, labour economics and social economics. She has supervised honours and PhD students in these areas. Her research findings have been presented at international conferences and published in highly-ranked international journals. Prior to entering the academic profession, she was a Manager in a building materials firm. Audrey also has experience in the marketing sector.





Koong Seow Shin holds a PhD and a Master’s degree in Economics from Universiti Putra Malaysia, and a Bachelor of Economics (Hons) from Universiti Utara Malaysia. She was a lecturer at Universiti Tunku Abdul Rahman (UTAR) from 2008 to 2012, and served as Head of the Department of Economics during her tenure at UTAR. She is currently a Lecturer at Multimedia University, and is also involved in supervision of undergraduate and postgraduate projects. She has completed two internal grant projects, and currently is involved in two FRGS projects. Her areas of research interests are Financial Economics, Monetary Economics and Macroeconomics, and her work has been published in several journals, including Economic Modelling, The IUP of Journal of Financial Economics, and the International Journal of Economic Research.





Sophia Loh Soo Fun holds a Bachelor of Economics with Honours from Universiti Kebangsaan Malaysia in Malaysia and a Master of Social Sciences (Economics) from National University of Singapore in Singapore. She joined Sunway University Business School in 2009. She is currently a Lecturer and Programme Leader of an undergraduate degree programme at the Department of Economics and Finance. Her teaching interests are in microeconomics and health economics. Given her academic background in economics, she has taught MBA programmes and several undergraduate modules in the areas of economics such as Business Economics, International Economics, Health Economics and Introductory Economics. Prior to this, she worked in various educational institutions in Singapore. Her research interests include health care reform, health care financing and utilisation.





Law Siong Hook is an Associate Professor from the Faculty of Economics and Management, Universiti Putra Malaysia. He holds a PhD in economics from the University of Leicester, United Kingdom. He was a visiting scholar at the Department of Economics, University of California. He has published more than 90 articles in refereed journals, including 35 in journals indexed by Thomson ISI and 60 cited in the Scopus index. Most of his published papers utilise panel estimation methods and threshold analysis to address issues in economics and finance.





Santhi Ramanathan is a Senior Lecturer in the Faculty of Business (FOB) at Multimedia University (MMU), Melaka, Malaysia. She obtained her Bachelor’s degree in Analytical Economics (Honours) in 1999, her Master of Economics in 2001 and her PhD, in Development Economics in 2011 from the University of Malaya, Kuala Lumpur, Malaysia. She joined MMU in 2003.





Tai Shzee Yew is Professor in the Department of Economics, Faculty of Accountancy and Management, Universiti Tunku Abdul Rahman. Dr Tai Shzee Yew was professor in the Department of Economics, Faculty of Economics and Management, Universiti Putra Malaysia until 2016. He obtained his PhD in Economics from the Simon Fraser University, Canada, his Master of Economics in Agricultural Economics from the University of New England, Australia, and his Bachelor of Resource Economics from Universiti Pertanian Malaysia. He has taught Principles of Economics, Microeconomics, Natural Resource Economics, Fisheries Economics, Statistics, Econometrics, Mathematical Economics and Research Methodology in Economics at UPM. His research interests are in the areas of fisheries economics, fisheries policy, economic modelling and forecasting and economic evaluation of natural resources. Dr Tai has published papers in national and international journals. He has been a research associate at the Institute of Agricultural and Food Policy Studies, UPM.





Lim Shiau Mooi is a Lecturer in the Faculty of Business & Finance, Universiti Tunku Abdul Rahman (UTAR), Malaysia. She obtained her Bachelor’s degree from Kolej Universiti Sains dan Teknologi Malaysia (KUSTEM) @ UMT in 2006 and Master’s degree from the School of Economics and Management, Universiti Putra Malaysia (UPM) in 2007. Her teaching includes Economics, Principles of Macroeconomics and Research Methods. Her areas of research interest include Applied Macroeconomics and International Economics.





Rusmawati Said is an Associate Professor in the Economics Department at Universiti Putra Malaysia. Dr Said graduated from Cardiff Business School, United Kingdom with a PhD in Economics, majoring in labour economics. Dr Said has been engaged in many research projects involving labour skill development. Some these include Human Resources Development (HRD) Modelling, Manpower Economic Development Integrated Systems, Integrating Studies on Manpower Planning in Multisectoral Framework, and a Study on Supply and Demand for Professional Occupations in Meeting the Need of a High Income Economy in 2020.





Sentot Imam Wahjono is an Associate Professor in the Management Department, Universitas Muhammadiyah Surabaya, Indonesia. He has experience in the Strengthening Cultural Entrepreneurship Project, Dili, East Timor (2005-2006), a Research Methodology course at the University of Queensland, Australia (2008-2009) as well as an assignment to teach at UTeM (2012-2017). In Malaysia, he has taught three subjects: Principles of Economics, Managerial Economics, and Technopreneurship. In Indonesia he teaches Human Resources Management, Organisational Behaviour, and Principles of Management. His research focuses include Family Business, Crowdfunding, and Leadership.





Jacqueline Liza Fernandez obtained her PhD in Economics from University of Malaya and her bachelor’s and master’s degrees in Social Sciences from Universiti Sains Malaysia. She is currently a Senior Lecturer in the School of Social Sciences (USM) and teaches various courses in economics, including Labour Economics, Malaysian Economics and Introduction to Economic Issues. She is also the supervisor of a number of post-graduate students who are specialising in the area of economics. Jacqueline has also served as a consultant to Kolej Damansara Utama (KDU) in her capacity as the coordinator for the Labour Economics course in the Bachelor of Management programme that is offered by the college. She has also served as the head of the Economics programme in the School of Social Sciences, Universiti Sains Malaysia.





Zulkornain Yusop is a Professor, CEO and President of Putra Business School, UPM. Previously, he was dean at Faculty of Economics and Management, Universiti Putra Malaysia. His research interests include international trade, foreign direct investment (FDI), capital flows and economic integration. He was consultant for various projects, including for the Ministry of Agriculture and Agro-based Industry, the Balance of Trade in food. He has published numerous journal articles, chapters in books and proceedings in the field of international economics. His articles have appeared in various journals, including the International Journal of Business and Society, the Journal of International Food and Agribusiness Marketing, World Review of Entrepreneurship, Management and Sustainable Development, Journal of Accounting and Finance, PERTANIKA, The Singapore Economic Review, The ICFAI Journal of Monetary Economic, The ICFAI Journal of Applied Economics, and Journal of the Asia Pacific Economy and Applied Economics Letters. More than 75 postgraduate students have graduated under his supervision (as main supervisor) including 13 with PhDs.





Yong Chen Chen is currently Senior Lecturer in the Faculty of Economics and Administration, University of Malaya. Her research interests include international trade and human capital. She has published several papers in international journals such as the Chinese Business Review, Malaysian Journal of Economic Studies, and the Journal of Developing Areas. She has also been involved in international collaborative research work with the International Labour Organization (ILO) and the Institute of Labour Market Information and Analysis (ILMIA). Dr Yong has undertaken several consultancies for TalentCorp Malaysia, PricewaterhouseCoopers (PwC), PE Research and ILMIA.





Aidil Rizal Shahrin is a Senior Lecturer in the Department of Banking and Finance, Faculty of Business and Accountancy, University of Malaya, Malaysia. His research focuses on applied econometrics in the areas of finance and macroeconomics. He has published in internationally refereed journals, including the Journal of Economics and Statistics, the Romanian Journal of Forecasting, and the International Journal of Statistics and Economics. He received his PhD in Financial Econometrics from University of Malaya, where he has taught since 2006.





Ratneswary Rasiah is a Senior Lecturer and the Programme Director of the Post-Graduate Business (Coursework) Programmes, Taylor's Business School, Taylor’s University, where she has been attached for the last eighteen years. She has extensive teaching experience in the field of Economics for the past thirty-one years, having taught numerous undergraduate and post-graduate modules. She has also taught Economics for the University of London International Programme, at the British University in Hanoi, Vietnam.





Tajul Ariffin Masron is an Associate Professor at the School of Management, Universiti Sains Malaysia. He has published more than fifty articles in reputable journals. His main research areas are related to International Economics and Economic Development, with a current focus on Foreign Direct Investment, Islamic Finance, and Regional Economic Integration.





Mohd Naseem Niaz Ahmad joined the Department of Economics, Universiti Putra Malaysia in 2003, where he is currently a Senior Lecturer. He received his PhD in Economics from Universiti Kebangsaan Malaysia (UKM) in 2015. He teaches undergraduate and graduate courses in Principles of Economics, Macroeconomic Theory, Economic Integration, Financial Economics and Monetary Economics. He has been coordinator of Principles of Economics in the department since 2015.




Table of Contents

 

PART 1: WHAT IS ECONOMICS?   
Chapter 1 Basic Concept of Economics1
Chapter 2 The Economic Problem11
PART 2: HOW MARKETS WORK 
Chapter 3 Demand and Supply23
Chapter 4 Elasticity and Its Application   45
Chapter 5 Supply, Demand and Government Policies63
Chapter 6 Consumer Surplus, Producer Surplus and Market Efficiency81
PART 3: HOUSEHOLDS' CHOICES 
Chapter 7 The Theory of Consumer Choice95
Chapter 8 Uncertainty and Asymmetric Information107
PART 4: FIRMS AND MARKETS 
Chapter 9 The Cost of Production117
Chapter 10 Perfect Competition133
Chapter 11 Monopoly151
Chapter 12 Monopolistic Competition167
Chapter 13 Oligopoly177
PART 5: FACTOR MARKETS 
Chapter 14 Demand and Supply in Factor Market195
Chapter 15 Income Inequality and Poverty217
PART 6: PUBLIC SECTOR 
Chapter 16 Externalities235
Chapter 17 Public Goods and Common Property Resources247
PART 7: MACROECONOMIC OVERVIEW 
Chapter 18 Introduction to Macroeconomics257
Chapter 19 Measuring National Output and National Income269
Chapter 20 Monitoring Unemployment and Inflation289
Chaptee 21 Productivity and Long-run Growth315
PART 8: THE CORE OF MACROECONOMIC THEORY 
Chapter 22 Aggregate Expenditure and Equilibrium323
Chapter 23 Fiscal Policy341
Chapter 24 Monetary Policy361
Chapter 25 Money Demand and the Equilibrium Interest Rate371
Chapter 26 Aggregate Demand in the Goods and Money Market381
Chapter 27 Aggregate Supply and the Equilibrium Price Level391
Chapter 28 Understanding Malaysia's Economy and Labour Market407
PART 9: THE MACROECONOMICS OF OPEN ECONOMIES 
Chapter 29 Openness in Goods and Financial Markets439
Chapter 30 The Goods Market in an Open Economy459
Chapter 31 Trade Barriers469
Chapter 32 Exchange Rate Regimes491
PART 10: FUTHER MACROECONOMICS ISSUES 
Chapter 33 The Middle Income Trap509
Chapter 34 Financial Crises525
Index549

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