Economic Science

Economic Science focuses on how to manage the scarce resources necessary for satisfying
people ́s needs.

Economic Scarcity
Economic Scarcity is the feeling of not having enough resources for satisfying people ́s
needs.

It is universal → it affects every country in the world and promotes the international trade of goods.

It is relative → scarcity is different within each country and nearby resources are not enough for
satisfying people ́s needs.

The need of choosing

Economic scarcity → Not enough resources to satisfy people’s needs
Choosing → Resources are scarce and they can be used in several ways. That is the reason why
humans try to use them in the best possible way according to our priorities and our income level.

Opportunity cost
The Opportunity Cost lies in every decision we make; when we have to choose one option
and leave the others.

Needs
A Need is our desire to satisfy something we are missing.
Primary level needs → They are considered essential because they are closely related
to human nature and have a direct impact on both survival and development.
Secondary level needs → Secondary needs are not essential. Satisfying these types
of needs increases well-being, and they vary from time to time or culture.

Goods and services

Scarcity levels → Free or Economic
Function → Consumption or Capital
Grade of transformation → Intermediate or Finished
Access → Public or Private

Economic activities
Consumption → Since families have a limited budget, they need to decide how to distribute income to
meet their needs according to priorities.
Production → Companies need to decide what goods are worth producing and what resources they
need to use to do so.
Distribution → Distribution is the link between the production and consumption of goods and
services.

Production factors
- Land
 - Workforce
- Capital funds

Economic agents
- Families
- Public Sector
- Enterprises

Microeconomics vs Macroeconomics
Microeconomics analyses each of the economic agents independently and macroeconomics
focuses in the Economy as a whole.

Economic models
Economists use math and statistics techniques in order to make forecasts. Economic models
replicate reality in a simple way so we can easily understand how the world works.

Economic sectors
Primary
Secondary
Tertiary