WHAT IS ECONOMICS?
The economic problem is that people are faced with unlimited wants whilst they have
limited resources, choice and scarcity.
The three basic economic questions:
What to produce?
How to produce?
For whom to produce?
Types of Resources
Natural resources
Human resources
Capital resources
Natural resources are supplied from the natural environment.
Human resources refers to the quantity and quality of physical labour. It is divided into
labour, physical or mental effort applied in the production of a good or service, and
enterprise, the coordination and management of production by an entrepreneur.
Capital refers to the man-made resources which assist human resources in the
production of goods and services, physical capital. Social overhead capital is the basic
infrastructure of the economy, usually supplied by the government. Capital is usually
referred to as an investment.
Microeconomics and Macroeconomics
Microeconomics deals with the economic problem from an individual perspective. It is
how consumers and producers make decisions. It is how markets and prices work to
allocate between competing industries.
Macroeconomics is the economic problem from society’s point of view. It is the
performance of the whole country from an economic perspective such as total
production, total employment and overall price level.
The Science of Economics
Human behaviour is largely controlled by rational self-interest.
Positive and Normative Economics
Positive economics is the testing and developing, it is the ‘what is’ in the economy.
Normative economics is the ‘what should be’ and involves personal opinion and value
judgements.
Scarcity, Choice and Opportunity Cost
Opportunity cost is the real or economic cost of a decision, the value of best alternative
that you give up.
Allocating Scare Resources
Scare resources are allocating by comparing the benefits of using resources against the
cost.
The economic problem is that people are faced with unlimited wants whilst they have
limited resources, choice and scarcity.
The three basic economic questions:
What to produce?
How to produce?
For whom to produce?
Types of Resources
Natural resources
Human resources
Capital resources
Natural resources are supplied from the natural environment.
Human resources refers to the quantity and quality of physical labour. It is divided into
labour, physical or mental effort applied in the production of a good or service, and
enterprise, the coordination and management of production by an entrepreneur.
Capital refers to the man-made resources which assist human resources in the
production of goods and services, physical capital. Social overhead capital is the basic
infrastructure of the economy, usually supplied by the government. Capital is usually
referred to as an investment.
Microeconomics and Macroeconomics
Microeconomics deals with the economic problem from an individual perspective. It is
how consumers and producers make decisions. It is how markets and prices work to
allocate between competing industries.
Macroeconomics is the economic problem from society’s point of view. It is the
performance of the whole country from an economic perspective such as total
production, total employment and overall price level.
The Science of Economics
Human behaviour is largely controlled by rational self-interest.
Positive and Normative Economics
Positive economics is the testing and developing, it is the ‘what is’ in the economy.
Normative economics is the ‘what should be’ and involves personal opinion and value
judgements.
Scarcity, Choice and Opportunity Cost
Opportunity cost is the real or economic cost of a decision, the value of best alternative
that you give up.
Allocating Scare Resources
Scare resources are allocating by comparing the benefits of using resources against the
cost.
