Well-being – economic well-being is about the level of economic prosperity and quality of life

(standards of living) in the economy. Economic agents interact with each other in order to

improve their economic well-being. The choices made by economic agents have both positive

and economic consequences on individuals and societies, thus affecting their relative economic

well-being.

Interdependence – this refers to the growing interaction and reliance on others in order to
achieve economic goals, because individuals and societies are not self-sufficient in a rapidly

changing world. As economics is the study of how individuals and societies work together to

satisfy their unlimited wants with the world’s limited resources, interdependency is an essential

concept in the subj ect. Globalization has led to a highly interdependent economic world, so

decisions made in one part of the world have economic consequences for individuals and firms

in other locations.

Scarcity – this concept is central to the study of economics, namely that resources are scarce
(finite or limited in supply) relative to the infinite (unlimited) needs and wants of individuals and

societies. It means there is an inadequate amount or shortage of resources in the economy.

Hence, rational economic choices are made when addressing the basic economic questions of

what, how, and for whom production should take place.

Efficiency – this refers to how well things are done, determined by the input–output ratio, i.e.
the input of scarce factor resources to generate the output of goods and services in order to

meet the infinite needs and wants of individuals and societies. Hence, efficiency is a quantifiable

concept in economics. Efficiency generates a socially optimum level of output of goods and

services in the economy, thus improving economic well-being.

Choice – economics is essentially the study of choice due to finite resources and infinite wants
of individuals and societies. Hence, economic agents have to make choices, thus giving rise to

opportunity costs. Economists study the opportunity costs and consequences of choice at the

microeconomic, macroeconomic and global level. Essentially, economics is about making wise

choices, due to the central concept of scarcity. In general, these choices are made in an efficient

and sustainable way.

Intervention – this refers to the roles and responsibilities of governments in terms of monitoring and
regulating the behaviour of the workings of different markets in the private sector. It involves public

sector involvement when markets fail to achieve an efficient allocation of scare resources (from

society’s point of view), thus j eopardizing economic well-being, efficiency, equity and sustainability.

Change – economic change is inevitable, and the economic world is continually evolving, so
economic agents need to be aware of change and thus adapt their thinking. In this discipline,

change can be brought about by institutional, structural, technological, economic and social factors.

Hence, an understanding of change as a concept is essential to the understanding of the subj ect.

Equity – this concept is about the idea of perceived fairness. The very nature of fairness is
subj ective, so is an aspect of normative economics, because what is deemed fair by an individual,

firm or government might not necessarily be the case for other stakeholders. It is about the

challenges faced by individuals and societies in terms of fair access to the world’s scarce

resources. As a normative concept, equity means different things to different individuals and

societies but enables economists to explore significant global issues.

Sustainability – from the perspective of economists, sustainability is about meeting the needs
and wants of the current generation without j eopardizing those of future generations. It is about

the ways in which economic activity impacts the natural environment and the world’s scarce

resources. Hence, sustainability is about intergenerational equity. As we strive for economic

well-being and prosperity, much damage has been done to the Earth’s scarce resources, and

hence, sustainability is of growing importance to the global economy.

 Figure 1.5 WISE ChoiCES

6 Introduction to economics