ECONOMY EXIST BECAUSE OF:

Without the
other,
economy
Demand may fail.

ECONOMY

Supply
HOW TO RESOLVE?
To resolve the problem of
scarcity, we must
efficiently and effectively
Resources
allocate our limited Needs & Wants
(Limited) Allocation =
resources to satisfy our Economics Satisfaction
Effective & Efficient Use
needs and wants.
THIS IS ECONOMICS!
 From Oikos = Household Economics
(Greek = Oikonomus)
Nomus = Management
Household Management
CETERIS PARIBUS ASSUMPTION

ALL OTHER FACTORS ARE HELD

CONSTANT (STAYS THE SAME)
FACTORS OF PRODUCTION
LAND REFERS TO NATURAL RESOURCES REGARDLESS OF FORM (MINERAL, WATER,
LAND RESOURCES)
LABOR HUMAN SKILL
2 TYPES
WHITE COLLARED PROFESSIONALS WITH DEGREES
BLUE COLLARED SKILLED WORKERS
NOT TO DISCRIMINATE BUT TO IDENTIFY THE NATURE OF WORK

CAPITAL MAN-MADE RESOURCES LIKE MACHINES, EQUIPMENT, BUILDINGS THAT

ARE NECESSARY FOR PRODUCTION
ENTREPRENEURSHIP
4 ECONOMIC QUESTIONS

WHAT TO PRODUCE
HOW TO PRODUCE
HOW MUCH
FOR WHOM
TYPES OF MARKET ECONOMY

TRADITIONAL
COMMAND
MARKET
MIXED
CIRCULAR FLOW MODEL