ECONOMICS
1 © Noted Summaries Grade 10 Economics
www.notedsummaries.co.za
, BASIC ECONOMIC CONCEPTS & PRINCIPLES
WHAT IS ECONOMICS? ECONOMIC PROBLEM
social science that examines how individuals, households, and firms SCARCITY PROBLEM
satisfy their unlimited needs and wants with limited and scarce
resources to satisfy the unlimited wants and needs of society with the use of
limited resources
→ People only have a limited amount of money BUT many needs and
desires to satisfy
→ The government also has a limited amount of money and cannot
NEEDS WANTS satisfy all its desires
= goods and services ESSENTIAL for = human desires for goods and services
basic survival ECONOMIC SYSTEM [3 CENTRAL QUESTIONS]
Z fancy technology
Z Housing & Safety Z trendy clothes/attire 1. OUTPUT QUESTION
Z Food Z Treats (food and gifts)
Z Water → WHAT GOODS AND SERVICES WILL BE PRODUCED
AND IN WHAT QUANTITIES?
OPPORTUNITY COST
DEMAND 2. INPUT/INPUT QUESTION
= the loss of other alternatives when one
= occurs when consumers are able and alternative is chosen → HOW will each of the goods and services be
willing to buy a product at a certain price = loss of value/benefit that would have been
produced?
caused by participating in a certain activity → HOW MANY of the scarce resources will be used in
= desires become real demand
relative to an alternative activity that
the production of each good
provides a higher return in value or benefit
I desire a Ford Figo but have demand = Playoff between wants and needs 3. DISTRIBUTION QUESTION
for a Kia Picanto
= FOR WHOM will the goods and services be produced?
2 © Noted Summaries Grade 10 Economics = WHO will receive the goods and services?
www.notedsummaries.co.za
, 2 BRANCHES OF ECONOMICS ECONOMIC APPROACHES
DEDUCTIVE APPROACH
→ propose theories and then test them against the facts to see if a certain theory
fits the facts (deduction)
. MICROECONOMICS MACROECONOMICS Theory → Facts
→ individual decisions → functioning of the economy 2 TYPES OF CONCLUSIONS:
[consumers, producers, as a whole [unemployment, 1. Conclusion = obvious > accepted without further reasoning
importers, government, inflation, growth, and monetary 2. Conclusion = not obvious > economists examine whether this is true or not
VALID ONLY IF:
exporters, companies] and fiscal policy]
→ Logical deduction correct
→ Original axiom / hypothesis correct
→ People involved = logical way respond to issues
1. Suggest reasons that would explain the problem [ formulate = theorems,
axioms / hypotheses ]
ECONOMIC PROBLEM 2. Classify + analyse EACH STATEMENT
3. Write down logical conclusions (EACH STATEMENT)
SCARCITY PROBLEM 4. Formulate theory + jump to conclusions
5. Test theory & conclusions to the reality of the facts
to satisfy the unlimited wants and needs of society with the use of INDUCTIVE APPROACH [EMPIRICAL APPROACH]
limited resources → process facts to create a theory (induction) [ data collection ]
ABSOLUTE SCARCITY Facts → Theory
→ when we have enough resources to buy goods but it’s just not 1. Use research = gather facts (data)
available 2. Classify + analyse facts
3. Make a generalization/formulate theory
RELATIVE SCARCITY 4. Derive conclusion + test to the facts
COMBINATION APPROACH
= use deduction + induction
→ when there are enough goods to satisfy a population's needs but
1. Select statements, axioms / hypotheses
most of the population is too poor to buy them [developing countries]
2. Analyse statements & formulate a theory
3. Collect your data
4. Test each statement against the data : to what extent is this true?
5. If the statement is true = draw conclusions
3 © Noted Summaries Grade 10 Economics www.notedsummaries.co.za
, GOODS & SERVICES ECONOMIC Methods
POSITIVE & NORMATIVE STATEMENTS
POSITIVE NORMATIVE
→ objective explanation & testing and → opinions on what should be
GOODS SERVICES
rejection of theories → subjective statements rather than
→ intangibles [medical → relies on FACTS objective statements [ include value
→ tangible objects [food, judgments ]
→ to do with what WAS, IS and WILL BE
clothing, houses] services, legal services, → religion, culture / class = NO → relies on OPINIONS
financial services] INFLUENCE → religion , culture / class = INFLUENCE
↑ consumer income = ↑ demand for new → look at ECONOMIC BEHAVIOR
cars level of excise on gasoline is too
FREE GOODS ECONOMIC GOODS ↓ exchange rate = ↑ in export abroad unreasonable and unfairly harms
W not rare = no price [air, sunshine] W goods produced at a cost from motorists
W freely available in unlimited scarce resources (scarce goods) retirement age must be raised to 75 to
quantities W limited quantity available combat the effects of our aging
W use value BUT NOT EXCHANGE W requires a price population
VALUE W uses & exchange value SCIENTIFIC METHODS
W supply out of control of people W supply is controllable economists = objective about the topics they study
W prosperity = multipliable in → formulate a question
quantity → investigate
→ Coming to a conclusion
FINAL GOODS INTERMEDIATE GOODS
PROBLEMS IN SOCIAL SCIENCES
W goods used/consumed [bread] W goods purchased to be used as
inputs in the production of other → Individuals think differently & behave differently
goods → Difficulty conducting a controlled test to determine how people will
react to a change
PRIVATE GOODS PUBLIC GOODS → Hard to change just one variable and keep all the other variables
W goods consumed by individuals & W use by community in general and constant.
consumption by others are consumption by others not → Economists = biased.
excluded excluded → Results =less precise than in physical sciences
→ Economic laws = general statements
CAPITAL GOODS CONSUMER GOODS
MODELS : ECONOMY
W goods not consumed, but used in W goods used for consumption by
= attempt to predict what the effect will be on circumstances if a
the production of other goods individuals/households
variable changes [ data / information needed ]
HOMOGENEOUS GOODS HETEROGENEOUS GOODS → Explain how relationships work
W goods exactly the same W differentiated goods available in → Predict what will happen if something needs to change
different varieties → Draw conclusion > develop in economic policy
4 © Noted Summaries Grade 10 Economics www.notedsummaries.co.za
1 © Noted Summaries Grade 10 Economics
www.notedsummaries.co.za
, BASIC ECONOMIC CONCEPTS & PRINCIPLES
WHAT IS ECONOMICS? ECONOMIC PROBLEM
social science that examines how individuals, households, and firms SCARCITY PROBLEM
satisfy their unlimited needs and wants with limited and scarce
resources to satisfy the unlimited wants and needs of society with the use of
limited resources
→ People only have a limited amount of money BUT many needs and
desires to satisfy
→ The government also has a limited amount of money and cannot
NEEDS WANTS satisfy all its desires
= goods and services ESSENTIAL for = human desires for goods and services
basic survival ECONOMIC SYSTEM [3 CENTRAL QUESTIONS]
Z fancy technology
Z Housing & Safety Z trendy clothes/attire 1. OUTPUT QUESTION
Z Food Z Treats (food and gifts)
Z Water → WHAT GOODS AND SERVICES WILL BE PRODUCED
AND IN WHAT QUANTITIES?
OPPORTUNITY COST
DEMAND 2. INPUT/INPUT QUESTION
= the loss of other alternatives when one
= occurs when consumers are able and alternative is chosen → HOW will each of the goods and services be
willing to buy a product at a certain price = loss of value/benefit that would have been
produced?
caused by participating in a certain activity → HOW MANY of the scarce resources will be used in
= desires become real demand
relative to an alternative activity that
the production of each good
provides a higher return in value or benefit
I desire a Ford Figo but have demand = Playoff between wants and needs 3. DISTRIBUTION QUESTION
for a Kia Picanto
= FOR WHOM will the goods and services be produced?
2 © Noted Summaries Grade 10 Economics = WHO will receive the goods and services?
www.notedsummaries.co.za
, 2 BRANCHES OF ECONOMICS ECONOMIC APPROACHES
DEDUCTIVE APPROACH
→ propose theories and then test them against the facts to see if a certain theory
fits the facts (deduction)
. MICROECONOMICS MACROECONOMICS Theory → Facts
→ individual decisions → functioning of the economy 2 TYPES OF CONCLUSIONS:
[consumers, producers, as a whole [unemployment, 1. Conclusion = obvious > accepted without further reasoning
importers, government, inflation, growth, and monetary 2. Conclusion = not obvious > economists examine whether this is true or not
VALID ONLY IF:
exporters, companies] and fiscal policy]
→ Logical deduction correct
→ Original axiom / hypothesis correct
→ People involved = logical way respond to issues
1. Suggest reasons that would explain the problem [ formulate = theorems,
axioms / hypotheses ]
ECONOMIC PROBLEM 2. Classify + analyse EACH STATEMENT
3. Write down logical conclusions (EACH STATEMENT)
SCARCITY PROBLEM 4. Formulate theory + jump to conclusions
5. Test theory & conclusions to the reality of the facts
to satisfy the unlimited wants and needs of society with the use of INDUCTIVE APPROACH [EMPIRICAL APPROACH]
limited resources → process facts to create a theory (induction) [ data collection ]
ABSOLUTE SCARCITY Facts → Theory
→ when we have enough resources to buy goods but it’s just not 1. Use research = gather facts (data)
available 2. Classify + analyse facts
3. Make a generalization/formulate theory
RELATIVE SCARCITY 4. Derive conclusion + test to the facts
COMBINATION APPROACH
= use deduction + induction
→ when there are enough goods to satisfy a population's needs but
1. Select statements, axioms / hypotheses
most of the population is too poor to buy them [developing countries]
2. Analyse statements & formulate a theory
3. Collect your data
4. Test each statement against the data : to what extent is this true?
5. If the statement is true = draw conclusions
3 © Noted Summaries Grade 10 Economics www.notedsummaries.co.za
, GOODS & SERVICES ECONOMIC Methods
POSITIVE & NORMATIVE STATEMENTS
POSITIVE NORMATIVE
→ objective explanation & testing and → opinions on what should be
GOODS SERVICES
rejection of theories → subjective statements rather than
→ intangibles [medical → relies on FACTS objective statements [ include value
→ tangible objects [food, judgments ]
→ to do with what WAS, IS and WILL BE
clothing, houses] services, legal services, → religion, culture / class = NO → relies on OPINIONS
financial services] INFLUENCE → religion , culture / class = INFLUENCE
↑ consumer income = ↑ demand for new → look at ECONOMIC BEHAVIOR
cars level of excise on gasoline is too
FREE GOODS ECONOMIC GOODS ↓ exchange rate = ↑ in export abroad unreasonable and unfairly harms
W not rare = no price [air, sunshine] W goods produced at a cost from motorists
W freely available in unlimited scarce resources (scarce goods) retirement age must be raised to 75 to
quantities W limited quantity available combat the effects of our aging
W use value BUT NOT EXCHANGE W requires a price population
VALUE W uses & exchange value SCIENTIFIC METHODS
W supply out of control of people W supply is controllable economists = objective about the topics they study
W prosperity = multipliable in → formulate a question
quantity → investigate
→ Coming to a conclusion
FINAL GOODS INTERMEDIATE GOODS
PROBLEMS IN SOCIAL SCIENCES
W goods used/consumed [bread] W goods purchased to be used as
inputs in the production of other → Individuals think differently & behave differently
goods → Difficulty conducting a controlled test to determine how people will
react to a change
PRIVATE GOODS PUBLIC GOODS → Hard to change just one variable and keep all the other variables
W goods consumed by individuals & W use by community in general and constant.
consumption by others are consumption by others not → Economists = biased.
excluded excluded → Results =less precise than in physical sciences
→ Economic laws = general statements
CAPITAL GOODS CONSUMER GOODS
MODELS : ECONOMY
W goods not consumed, but used in W goods used for consumption by
= attempt to predict what the effect will be on circumstances if a
the production of other goods individuals/households
variable changes [ data / information needed ]
HOMOGENEOUS GOODS HETEROGENEOUS GOODS → Explain how relationships work
W goods exactly the same W differentiated goods available in → Predict what will happen if something needs to change
different varieties → Draw conclusion > develop in economic policy
4 © Noted Summaries Grade 10 Economics www.notedsummaries.co.za
