Summary Chapter 1 - What economics is all about

Chapter 1: What
economics is all
about




1.1 What is economics?

, Economics – Economics is the study of the use of scarce resources to satisfy
unlimited human wants. It deals with the choices that people have to make.
Economists seek to describe, explain, analyse, and predict.
Scarcity – not enough resources to satisfy all wants (unlimited wants, limited
resources)
This leads us to the need to choose.



1.2 Scarcity, choice, and opportunity cost
Wants  Human desires for goods and services
 Unlimited
 We always want more or better goods/services
Needs  Necessities – essential for survival
 Not unlimited
 Eg: food, water, shelter, clothing
Demand  If those who want to purchase it have the necessary
means to do so


Resources:
 Limited, scarce, not freely available
 Are the means by which goods can be produced or services offered
 Also called: Factors of production

Types
Natural resources Agricultural land, minerals, and fishing resources
Human resources Labour
Man-made resources Machines


There is always cost involved in any use of scarce resources.
Scarcity and choice:


Demand is greater than the availability
Scarcit Affects everyone

y
Some of the unlimited wants have to be
sacrificed to meet the fulfilmet of other wants
Choice Choice = sacrifice of money and opportunity
Everytime a choice is made opportunity costs
are incurred




Opportunity cost: