Silke Putzeys Sport Economics 2025
Les 1: introduction (11/02)
Belangrijk = . = komma en , = 1000
What is economics?
VIDEO = ECONOMICS CONSTANTLY CHANGES
- Economics is the study of how people make choices under scarcity.
o Study of human action on how they make decisions in the face of
scarcity (resources are not limitless)
- Incentives = motivators (can be good or bad, vb: better grade, hit the next
time you come to class punishment or reward)
- Basic principles of economics are infected for a long time but they still stay
the same
- Scarcity (=schaarste): The fundamental economic problem of having
seemingly unlimited human wants and needs in a world of limited resources
o Resources are not limited and can’t satisfy all human wants
o Because of scarcity, choices must be made about how to allocate
(toewijzen) resources
- Opportunity cost:
o The value of the next best alternative you give up when making a
choice
- Economics help explain decisions at both individual and societal levels
- Social science about how economic actors make decisions about resource
allocation to achieve maximal output (basic management principles)
- Most precious resource in live = TIME, it is irreplaceable
- Economics is not about money, but money for how how to manage welfare/it’s
a mean to incentivize. It deals and talks a lot about money.
A FEW DEFINITIONS
- General definition = the science that deals with the production, distribution,
and consumption of goods and services, or the material welfare of
humankind.
- More broad = economics is a social science concerned with the production,
distribution and consumption of goods and services. It studies how
individuals, businesses, governments and nations make choices on allocating
resources to satisfy their wants and needs, and tries to determine how these
groups should organize and coordinate efforts to achieve maximum output.
- Basic definition = the study of how humans make decisions in the face of
scarcity. These can be individual decision, family decisions, business decisions
or societal decisions.
1
,Silke Putzeys Sport Economics 2025
How do economic actors make decisions? to make choices, maximize you utility
(positive effect/what is useful for you) (we have to increase utility under scarcity:
problem)
WHY SPECIALIZATION , MARKETS AND MONEY MATTER IN ECONOMICS
- Adam Smith explains in The Wealth of Nations how economic decisions are
made through specialization and market exchange.
- Specialization increases efficiency: in a pin factory, one person can make 20
pins/day, but a team with specialized tasks can produce 200,000.
- Specialized labor improves quality and productivity.
- Economies of scale: producing more leads to lower costs per item (e.g., the
price per pin goes down).
- Specialization only makes sense if there's a market where supply meets
demand, otherwise, it’s not rational to specialize.
- Without specialization and markets, people would have to constantly
negotiate, which is inefficient.
- Money plays a vital role in making this system work, it (2 core principles of
money):
o Preserves value over time.
o Serves as a medium of exchange.
- We are paid in money, not goods, because it brings accuracy and practicality
to economic transactions.
- If inflation occurs, money loses value and no longer functions effectively as a
medium of exchange.
- Conclusion: Specialization, markets, and a stable currency are essential for a
functioning economy.
Specialisation (by Adam Smith) = good idea, economy of scale , price per pin (raw
material) price goes down, you need a market (place where supplier and demand
meet) because otherwise it is not rational to specialize. If there was no
specialization, there will be a lot of negotiation. We need accuracy (teacher is paid in
money not in goods..)
Opportunity cost
= the next best opportunity you give up by making a choice : you don’t take
all choices in consideration (ex: in restaurant you choose between pasta or pizza
and don’t look at the fish)
- Example:
o Catch 10 fish or 10 bananas -> 1 fish per banana
o Catch 30 fish or 10 bananas -> 3 fish per banana
- 2nd can catch fish and 1rst can grab bananas and they can trade with
each other
- Works only when you have markets
2
,Silke Putzeys Sport Economics 2025
VIDEO : TRADING THINGS , FOCUSING ON TASKS WE ARE GOOD IN
Key-concepten:
- Definition of OC = The value of the next best alternative foregone when
making a decision. It's not just about monetary costs but also includes time,
resources, and other factors.
- Real-life examples:
o Choosing Leisure Over Work: Opting to watch a movie instead of
working extra hours means sacrificing the additional income you could
have earned.
o Purchasing Decisions: Buying a new smartphone might mean you can't
afford a weekend getaway.
- Importance in decision-making
o Understanding opportunity costs helps individuals and businesses make
informed choices by considering what they must give up.
o It emphasizes that every decision has a cost, even if it's not
immediately apparent.
- Applications in economics:
o Opportunity cost is crucial in resource allocation, budgeting, and
evaluating the true cost of decisions.
o It's foundational in concepts like comparative advantage and cost-
benefit analysis
OPPORTUNITY COST = BEERS AND BURGERS
Beer Burgers
0 5
2 4
4 3
6 2
8 1
10 0
- ROOD = budgetconstraint = je kunt enkel combinaties kiezen die op of
onder deze lijn liggen. Alles erboven is onbetaalbaar. Budgetlijn = alle
combinaties die je kunt betalen
- GROEN = indifference curve (shows same degree of utility, gives you same
amount of pleasure. Deze kromme toont combinatie van bier en burgers die
jou evenveel nut/tevredenheid geven. Je maakt dus geen voorkeur tussen de
punten op deze lijn.
- BLAUW = indifference curve wilt wss geen burgers maar enkel bier. Geen
optimale combinatie
3
, Silke Putzeys Sport Economics 2025
- Optimale keuze = waar budgetlijn en hoogste indifferentiecurve elkaar
raken (1 snijpunt)
Opportunity cost of buying 2 beers = 1 burger (what you are missing out on by
making a certain choice) the next best choice that you gave up with the choice you
make. In dit geval gaat het er om dat je de burger niet hebt omdat je voor bier koos.
Question = which combination will you choice = different indifference curve
The second green indifference curve is the best choice because it Is the farthest
away from 0,0 but has to be under/same as the red line. Optimal choice = most
utility (nut) in your budget.
TOTAL & MARGINAL UTILITY
unit Total utility Marginal utility
1 10 10
2 18 8
3 24 6
4 28 4
5 30 2
6 28 -2
7 20 -8
8 12 -8
9 0 -12
10 -20 -20
When do we you use this type of function = in food
BLAUW: total Utility function: mathematical way of transferring certain units in to
utility (bv: foodconsumption)
ROOD: marginal utility, additional utility from the next customer utility
Total utility (TU) = het totale genot/nut dat je krijgt van x aantal eenheden (bv:
burgers)
Marginal utility (MU) = hoeveel extra genot/nut je krijgt van de volgende eenheid.
Bv: van 1 2 eenheden gaat je nut van 10 18 dan is je marginal utility = 8
- MU is positief tot aan het optimum, daarna wordt het negatief
- Je bereikt je optimaal nut op het punt waar MU = 0
- Na dit punt daalt je TU, je wordt er slechter van dan daarvoor (bv: je bent
‘onverzadigd’)
- Vanaf een bepaald pung (bv: eenheid 6) zie je dat marginal utility negatief
wordt. Dat toont het wet van het dalend grensnut (law of diminishing marginal
4
Les 1: introduction (11/02)
Belangrijk = . = komma en , = 1000
What is economics?
VIDEO = ECONOMICS CONSTANTLY CHANGES
- Economics is the study of how people make choices under scarcity.
o Study of human action on how they make decisions in the face of
scarcity (resources are not limitless)
- Incentives = motivators (can be good or bad, vb: better grade, hit the next
time you come to class punishment or reward)
- Basic principles of economics are infected for a long time but they still stay
the same
- Scarcity (=schaarste): The fundamental economic problem of having
seemingly unlimited human wants and needs in a world of limited resources
o Resources are not limited and can’t satisfy all human wants
o Because of scarcity, choices must be made about how to allocate
(toewijzen) resources
- Opportunity cost:
o The value of the next best alternative you give up when making a
choice
- Economics help explain decisions at both individual and societal levels
- Social science about how economic actors make decisions about resource
allocation to achieve maximal output (basic management principles)
- Most precious resource in live = TIME, it is irreplaceable
- Economics is not about money, but money for how how to manage welfare/it’s
a mean to incentivize. It deals and talks a lot about money.
A FEW DEFINITIONS
- General definition = the science that deals with the production, distribution,
and consumption of goods and services, or the material welfare of
humankind.
- More broad = economics is a social science concerned with the production,
distribution and consumption of goods and services. It studies how
individuals, businesses, governments and nations make choices on allocating
resources to satisfy their wants and needs, and tries to determine how these
groups should organize and coordinate efforts to achieve maximum output.
- Basic definition = the study of how humans make decisions in the face of
scarcity. These can be individual decision, family decisions, business decisions
or societal decisions.
1
,Silke Putzeys Sport Economics 2025
How do economic actors make decisions? to make choices, maximize you utility
(positive effect/what is useful for you) (we have to increase utility under scarcity:
problem)
WHY SPECIALIZATION , MARKETS AND MONEY MATTER IN ECONOMICS
- Adam Smith explains in The Wealth of Nations how economic decisions are
made through specialization and market exchange.
- Specialization increases efficiency: in a pin factory, one person can make 20
pins/day, but a team with specialized tasks can produce 200,000.
- Specialized labor improves quality and productivity.
- Economies of scale: producing more leads to lower costs per item (e.g., the
price per pin goes down).
- Specialization only makes sense if there's a market where supply meets
demand, otherwise, it’s not rational to specialize.
- Without specialization and markets, people would have to constantly
negotiate, which is inefficient.
- Money plays a vital role in making this system work, it (2 core principles of
money):
o Preserves value over time.
o Serves as a medium of exchange.
- We are paid in money, not goods, because it brings accuracy and practicality
to economic transactions.
- If inflation occurs, money loses value and no longer functions effectively as a
medium of exchange.
- Conclusion: Specialization, markets, and a stable currency are essential for a
functioning economy.
Specialisation (by Adam Smith) = good idea, economy of scale , price per pin (raw
material) price goes down, you need a market (place where supplier and demand
meet) because otherwise it is not rational to specialize. If there was no
specialization, there will be a lot of negotiation. We need accuracy (teacher is paid in
money not in goods..)
Opportunity cost
= the next best opportunity you give up by making a choice : you don’t take
all choices in consideration (ex: in restaurant you choose between pasta or pizza
and don’t look at the fish)
- Example:
o Catch 10 fish or 10 bananas -> 1 fish per banana
o Catch 30 fish or 10 bananas -> 3 fish per banana
- 2nd can catch fish and 1rst can grab bananas and they can trade with
each other
- Works only when you have markets
2
,Silke Putzeys Sport Economics 2025
VIDEO : TRADING THINGS , FOCUSING ON TASKS WE ARE GOOD IN
Key-concepten:
- Definition of OC = The value of the next best alternative foregone when
making a decision. It's not just about monetary costs but also includes time,
resources, and other factors.
- Real-life examples:
o Choosing Leisure Over Work: Opting to watch a movie instead of
working extra hours means sacrificing the additional income you could
have earned.
o Purchasing Decisions: Buying a new smartphone might mean you can't
afford a weekend getaway.
- Importance in decision-making
o Understanding opportunity costs helps individuals and businesses make
informed choices by considering what they must give up.
o It emphasizes that every decision has a cost, even if it's not
immediately apparent.
- Applications in economics:
o Opportunity cost is crucial in resource allocation, budgeting, and
evaluating the true cost of decisions.
o It's foundational in concepts like comparative advantage and cost-
benefit analysis
OPPORTUNITY COST = BEERS AND BURGERS
Beer Burgers
0 5
2 4
4 3
6 2
8 1
10 0
- ROOD = budgetconstraint = je kunt enkel combinaties kiezen die op of
onder deze lijn liggen. Alles erboven is onbetaalbaar. Budgetlijn = alle
combinaties die je kunt betalen
- GROEN = indifference curve (shows same degree of utility, gives you same
amount of pleasure. Deze kromme toont combinatie van bier en burgers die
jou evenveel nut/tevredenheid geven. Je maakt dus geen voorkeur tussen de
punten op deze lijn.
- BLAUW = indifference curve wilt wss geen burgers maar enkel bier. Geen
optimale combinatie
3
, Silke Putzeys Sport Economics 2025
- Optimale keuze = waar budgetlijn en hoogste indifferentiecurve elkaar
raken (1 snijpunt)
Opportunity cost of buying 2 beers = 1 burger (what you are missing out on by
making a certain choice) the next best choice that you gave up with the choice you
make. In dit geval gaat het er om dat je de burger niet hebt omdat je voor bier koos.
Question = which combination will you choice = different indifference curve
The second green indifference curve is the best choice because it Is the farthest
away from 0,0 but has to be under/same as the red line. Optimal choice = most
utility (nut) in your budget.
TOTAL & MARGINAL UTILITY
unit Total utility Marginal utility
1 10 10
2 18 8
3 24 6
4 28 4
5 30 2
6 28 -2
7 20 -8
8 12 -8
9 0 -12
10 -20 -20
When do we you use this type of function = in food
BLAUW: total Utility function: mathematical way of transferring certain units in to
utility (bv: foodconsumption)
ROOD: marginal utility, additional utility from the next customer utility
Total utility (TU) = het totale genot/nut dat je krijgt van x aantal eenheden (bv:
burgers)
Marginal utility (MU) = hoeveel extra genot/nut je krijgt van de volgende eenheid.
Bv: van 1 2 eenheden gaat je nut van 10 18 dan is je marginal utility = 8
- MU is positief tot aan het optimum, daarna wordt het negatief
- Je bereikt je optimaal nut op het punt waar MU = 0
- Na dit punt daalt je TU, je wordt er slechter van dan daarvoor (bv: je bent
‘onverzadigd’)
- Vanaf een bepaald pung (bv: eenheid 6) zie je dat marginal utility negatief
wordt. Dat toont het wet van het dalend grensnut (law of diminishing marginal
4
