Professional Documents
Culture Documents
Examples:
Goods are buildings
Infrastructures
Machines and other tools used in the
production process
Entrepreneurship which is not traditionally
considered to be a factor of production, is now
thought to be an indispensable aspect since this
is the ability to organize all the other factors of
production in order to carry out effectively the
production process.
Economics is classified into 2 scopes:
Microeconomics and Macroeconomics.
Microeconomics is the study of the choices you
made by economic actors such as households,
companies, and individual markets, whereas
Macroeconomics examines the behavior of the
entire economist it also tackles the aggregate or the
total values that describe the whole economy.
One very important aggregate is the
“Gross Domestic Product” (GDP). It
measures the total output or the
market value of goods and services
that a country produces in one year.
Other macroeconomics indicators
include employment growth, interest
rate, and inflation.
Adam Smith create a work entitled as “An
Inquiry into the nature and Causes of the Wealth
of Nations (1776)”. It contributed to the theory
of price formation, the relationship of market
outcomes and public interest, the role of state in
the economy, and the sources of economic
growth.
It was also in this book where the
concept of “invisible hand” was
introduced. This concept proposes
that market equilibrium is reached
when buyers and sellers are free to
move on their own without the
intervention of the government.
The desire to maximize gains, both
buyers and sellers, will lead to a
socially optimum result. Other
influential economists includes
Thomas Malthus, known for his work
“ An Essay on the Principle of
Population” (1798), and David
Ricardo’s work Principles of Political
Economy and Taxation (1817).