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banks and petroleum refineries, or companies that make automobiles, computers and, yes, even online
games or social media providers.
These simple questions emphasize that the central concept of economics is summarized in one simple
word: SCARCITY. Scarcity requires a great need for economics to be studied by everyone. The choices
we make on the use of our scarce resources largely determine what needs and wants we would be
satisfying and how much satisfaction would we get.
In the entire history of humankind, there has only been one planet thus far where we get our resources:
Mother Earth. No other planet in our entire galaxy, much less our own solar system, could contribute to
our pool of resources, which we can use to make the things we use and consume.
Scarcity as an issue does not only pertain to resources that are used to produce goods and services. It
also pertains to other various resources, such as financial resources (capital) in a business enterprise, the
aim of which is to maximize its resources to make profit. It may also pertain to the daily, weekly, or
monthly limited allowances and budgets of students, whose concern is how to stretch the budget for a
particular period.
Scarcity also implies that an income-earner should also be able to manage his or her money until the
next payday. Job seekers are also concerned since there seems to be scarcity of jobs in the Philippines
today. The government is also concerned since limited national budgets dictate austerity measures and
priority projects only.
Scarcity is the condition that results from society not having enough resources to produce all the things
people would like to have.
A need is a basic requirement for survival, such as food, clothing, and shelter.
A want is simply something we would like to have but is not necessary for survival Food, for example, is
needed for survival. Because many foods will satisfy the need for nourishment, the range of things
represented by the term want is much broader than that represented by the term need
TINSTAAFL
Because resources are limited, everything we do has a cost—even when it seems as if we are getting
something “for free.” For example, do you really get a free meal when you Figure 1.1 Scarcity use a “buy
one, get one free” coupon? The business that gives it away still has to pay for the resources that went
into the meal, so it usually tries to recover these costs by charging more for its other products. In the
end, you may actually be the one who pays for the “free” lunch! Realistically, most things in life are not
free, because someone has to pay for producing them in the first place. Economists use the term
TINSTAAFL to describe this concept. In short, it means There Is No Such Thing As A Free Lunch.
Economics is from the Greek word ‘oikonomia’ or ‘oikonomos,’ which means management of
household: oikos (house) + nomos (managing)
In the modern world, economics, means
1) The careful or thrifty use of management of resources, as of income, materials, or labor; or
2) The management of the resources of a country, community, or business
Somebody interested in the evolution of the word economics may inspect the following:
John Stuart Mill was the heir to David Ricardo (Father of International Trade), who developed the basic
analysis of the political economy or the importance of a state’s role in its national economy. The term
political economy is an older English term applies management to an entire polis (state). Moreover,
Karl Marx, a German, also emerged during this period. He is much influenced by the conditions brought
by the industrial revolution upon the working classes. His major work, Das Kapital, is the centerpiece
form which major socialist thought was to emerge.
Neoclassical Economics was believed to have transpired around the year 1870. Its main concern was
market system efficiencies. It brought recognition to the economists
Leon Walras, who introduced the general economic system, Leon Walras developed the analysis
of equilibrium in several markets.
Alfred Marshall, who became the most influential economists during that time because of his
book Principles of Economics Alfred Marshall developed the analysis of equilibrium of a
particular market and the concept of “marginalism”