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INTRODUCTION%20TO%20PUBLIC%20SECTOR%20

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Title: INTRODUCTION%20TO%20PUBLIC%20SECTOR%20


1
INTRODUCTION TO PUBLIC SECTOR ECONOMICS
  • POLS 4358

2
TOPICS
  • WHAT ARE THE KEY ISSUES ECONOMICS IS CONCERNED
    WITH?
  • ECONOMIC ANALYSIS THE PUBLIC SECTOR
  • HOW ECONOMISTS PERCEIVED THE WORLD THE CIRCULAR
    MODEL

3
WHAT ARE THE KEY ISSUES ECONOMICS IS CONCERNED
WITH?
  • Scarcity management
  • limitless demands and limited resources
  • Every society faces three key questions
  • What is to be produced?
  • TASTE PREFERENCE
  • How is it to be produced?
  • EFFICIENCY
  • Who gets what?
  • EQUITY

4
WHAT ARE THE KEY ISSUES ECONOMICS IS CONCERNED
WITH?
  • Every decision, made either by an individual or
    society, concerning the previous three questions
    necessarily implies an opportunity cost
  • An opportunity cost is essentially what you give
    up of X in order to obtain Y
  • Time
  • Forgone income
  • Resources

5
ECONOMIC ANALYSIS THE PUBLIC SECTOR
  • Every society must decide how to address the
    above three questions and make choices. What are
    the choices?
  • Market driven vs. state allocative policy
  • Recently there exists a debate concerning whether
    the private sector can deliver more efficiently
    services that traditionally are governmental
    functions such as education, trash collection,
    roads, mail delivery, etc.

6
ECONOMIC ANALYSIS THE PUBLIC SECTOR
  • The objective of this class, therefore, is to be
    able to evaluate pros and cons of choices of
    market (prices) versus state driven allocative
    mechanisms (taxes fees).
  • The analysis employed will be positive (cause
    effect) rather than normative (value judgment)
    driven.
  • Microeconomics provides the theoretical tools to
    analyze the framework of choices.

7
HOW ECONOMIST PERCEIVED THE WORLD THE CIRCULAR
MODEL
HOUSEHOLDS
FACTOR MARKET
GOODS MARKET
PUBLIC SECTOR
BUSINESSES
8
THE FLOW OF MONEY
  • HOUSEHOLD
  • Income salary, rent, and interest
  • Business
  • Profits Total revenue Total costs
  • Total costs salary rent interest
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