Department of Computer Systems Engineering, DUET, Karachi.

Economy

Lecture 02

Batch : 2019
Session : Fall 2020
Subject Teacher : Engr. Motia Rani
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What is an Economy?

• It is the careful management of material/available resources.

• An economy, or economic system, is the way a nation makes

economic choices about how the nation will use its resources to
produce and distribute goods and services.
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Resources

• Also called factors of production, are all the things used in

producing goods and services.

• They fall into four categories:

1. Land
2. Labor
3. Capital
4. Entrepreneurship
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Land

• All gifts of nature, such as: water, air, minerals,

sunshine, plant and tree growth, as well as the land
itself which is applied to the production process.

• Land refers to everything on Earth that is in its

natural state, or Earth's natural resources.
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Labor

• The efforts, skills, and knowledge of

people which are applied to the
production process.

• Labor refers to all the people who work

in the economy.
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Capital

• Capital includes money needed to

start and operate a business.

Example:
• At a national level, capital includes money Business

infrastructure, such as roads, ports, Self

Relative/Family/ Friends
sanitation facilities, & utilities. Bank loan
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Entrepreneurship
• Entrepreneurship refers to the skills of people who are willing to risk their time and
money to run a business.
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Scarcity
• The difference between wants and needs and available resources
• Example: Most underdeveloped nations have natural resources, but do not have capital
or skilled labor to develop them.

Means Limited amount / Limited Quantity

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Example of Scarcity : Money

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Example 2 of Scarcity : Time

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Choices

• Every day, in our country and countries around the world, business owners, consumers,
workers, and governments must make choices about using scarce resources.

• Together these choices create an economy.

• These choices fall into three groups:

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Basic Economic Choices

• WHAT goods and services should be produced?

• HOW should the goods and services be produced?

• WHO receives and consumes these goods and services.

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