CHAPTER 1: RESOURCE UTILIZATION

AND ECONOMICS
What is Economics?
 It is the allocation of the scarce means of production toward the satisfaction of human
needs and wants.
Scarce means of production
 Refers to our economic resources like Land, Labor and Capital which we use to produce
all the goods and services.
Origin of Economics
 Two Greek roots of the word are Oikos – Nomus meaning, household and system or
management.
 Therefore, means House hold Management
The Central Problem of Economics
- Scarcity, is the central problem confronting every
man and society.
What is Scarcity?
Limited availability of economic resources
relative to man’s unlimited needs and wants.
Factors of Production
• Land – broadly, it refers to all natural resources
which are given by and found in nature.
• Labor – it is any form of human effort exerted
in the production of goods and services.
• Capital – it is any manmade goods used in the
production of other goods and services.
• Entrepreneurship – is a person who organizes,
manages, and assumes the risk of a firm taking
a new idea and turning into a successful
business.
Four Basic Economic Questions
1. What to produce – it identify what are goods and
services needed to be produced for the utilization of the
society.
2. How to Produce – identify the different methods and
techniques in order to produce goods and services.
3. How much to Produce – it identifies number of goods
and services needed to produced in order to answer the
demand of man and society.
4. For whom to produced – identifies the people who
demand the commodities produced in the society.
 Branches of Economics
1. Micro Economics
 It is a branch of economics which deals with the
individual decision of units of the economy.
2. Macro Economics
 It is the branch of economics that studies the
relationship among broad economic aggregates.
 Economic as Related to “Social Science”
1. Anthropology – study the biological,
psychological and cultural aspect of human life.
2. Political Science – systematic study of the state
and the government.
3. Sociology – study of people.
4. Psychology – study of human behavior.
5. History – the study of past events
 Goals of Economics
1. Strengthen Economic Freedom
 Freedom such as Consumer choice, occupational
choice, to consume or to save and to own properties.
2. Promote Economic Efficiency.
 Producing ,more output with the use of fewer resources.
3. Promote Economic Stability
 Consistent growth in a changing world the movement
of output in the economy at a reasonable ranges.
4. Promote Economic Security
 Existence of individual security, incomes are
established in the market place.
5. Improve high level of growth in the economy
 Capacity to produce goods, growing rapidly than
the population.