INTRODUCTION TO ECONOMY

1. Economics is the study of how people use limited resources to satisfy unlimited wants
and needs. It is about making choices and decisions about how to allocate resources in
the most efficient and effective way.
2. There are two main branches of economics: microeconomics and macroeconomics.
Microeconomics focuses on individual consumers and businesses, and how they make
decisions about what to buy, sell, and produce. Macroeconomics focuses on the big
picture, including factors such as inflation, unemployment, and economic growth.
3. Economic resources, or factors of production, include land, labor, capital, and
entrepreneurship. These are the things that people use to produce goods and services.
4. Scarcity is a fundamental concept in economics, because there is never enough of
anything to meet everyone's wants and needs. This means that people must make
choices about how to use their resources.
5. Economics is an important subject because it helps people understand how the world
works and how they can make better decisions in their own lives. It also helps people
understand how governments can use economic policies to improve the overall well-
being of society.
6. Definition of Some Economical Words
a) Scarcity: Scarcity refers to the limited availability of resources to meet unlimited
wants and needs. This fundamental concept of economics is based on the idea that
resources are finite and that there is never enough to meet all of our wants and needs.
This scarcity forces individuals and societies to make choices about how to allocate
resources and prioritize their wants and needs.
Example: Scarcity: An example of scarcity is when a drought reduces the availability of
water for crops. This scarcity of water forces farmers to make choices about how to allocate
their limited water resources to their crops. They may need to choose which crops to water
and which to let die, or they may need to find alternative sources of water, such as irrigation
or rainwater harvesting.
b) Resources: Resources refer to anything that can be used to produce goods and
services, including natural resources (such as land, water, and minerals), human
resources (such as labor and skills), capital resources (such as tools, equipment, and
buildings), and entrepreneurial resources (such as knowledge, innovation, and
initiative). These resources are used in combination to produce the goods and services
that we want and need.
Example: Resources: An example of resources is a factory that produces toys. The factory
uses land, buildings, machinery, and the labor of workers to produce the toys. The land and
buildings provide the physical space for production, while the machinery and workers
provide the capital and human resources required to produce the toys.
c) Decision-making: Decision-making refers to the process of choosing among
alternative courses of action. In economics, decision-making is a fundamental aspect
of how individuals, businesses, and governments allocate resources and prioritize
wants and needs. Economic decisions are made based on the principles of scarcity and
the availability of resources. The choices we make reflect our values, preferences, and
constraints, and they determine the outcomes of economic systems.
Example: Decision-making: An example of decision-making is a family deciding what to
have for dinner. The family must consider the availability of ingredients, their preferences for
certain foods, and their budget for groceries. Based on this information, they make a decision
about what to have for dinner. This simple example illustrates how individuals make
economic decisions based on the principles of scarcity and the availability of resources.