ECONOMIC

ANALYSIS
MBA 211
ECONOMIC
S AND
ECONOMIC
PROBLEMS
 What is Economics?

Economists study the Economicss Study of how people

choices we make and use their limited
also the consequences of resources to fulfill
these choices unlimited wants and
need.

Microeconomicss Macroeconomics
 study of small individual economic  studies the aggregate behavior of
units. the entire economy

 ex: households, firms and industries  ex: unemployment, inflation, GDP,

making choices. international trade, etc
 Economics Resources

Sometimes called factors of production

Used in the production of goods and services
Classified as land, labor, capital, and
enterprise
Scarce relative to the unlimited wants
 Basic Economics Concepts

1. Scarcity
economic resources are limited compared to
wants which are unlimited
scarcity – impossible to satisfy our unlimited
wants with the limited resources
wants always exceed the limited resources
Peoples’ wants are greater than the economy’s
ability to produce desirable goods & services
 Basic Economics Concepts
Choice
 because of scarcity, we cannot fulfill all wants and must choose from
the available alternatives.

Choice is necessary because resources can be used in lots of ways to

make different goods & services.

The only way unlimited wants can be reconciled with limited resources
is through choice

As there are insufficient resources to satisfy all wants, choices must be
made at all levels i.e. individual consumers, producers, and the
government.

As scarcity is universal, everyone must choose.

 Basic Economics Concepts

3. Opportunity Cost

 the second best alternative forgone after making a choice.

 the second best foregone alternative.
 Example:
 Government has a piece of vacant land to be used either to build a
hospital, a school, or a sports center (scarcity).
 Because the land is enough for only one project, then choice must
be made from the alternatives available (choice).
 The government decides to build a hospital, so the school must be
forgone/sacrificed (opportunity cost)
Basic Economic Problems
(Questions)
 1. What to Produce?

 Means choosing the mix of goods & services to produce

Example: Should the economy devote resources to health and education or
defense and police?

2. How to Produce?

 Who will do the production and which method of production will be used.
Should the economy use labor-intensive technique and everyone has a job
or use more efficient methods of production that involve the use of
machines even if this means fewer jobs?
 3. For whom to Produce?

 Means who will consume the goods & services after they have
been produced
How will we decide who receive the output?
Should an economy be geared to provide goods & services to
every person as equally as possible or should those who work hard
get more?
What is the best method of distributing products to ensure the
highest level of wants are met?
 Economic Systems

 All nations face the problem of scarcity

 They have insufficient resources to produce all
the goods & services which their citizens need and
want
 An economic system is a system which attempts
to solve the basic economic problem of scarcity.
 They have to address three basic questions:
Planned (Command) Economic
System (Socialism)
Free (Market) Economic System
(Capitalism)
Mixed Economic System
References
• https://slideplayer.com/slide/7470576/?fbclid=IwAR3zzW6nafHNF6c3D0KBhUnXkrJ83S
vWOCih1do83x0WApGAOC7fqhiNftc
• https://slideplayer.com/slide/7912039/?fbclid=IwAR2dmluoRDNnI5IiUWbv88xiNNkzUX
HUYI1r6bMdJd9Z9icBnSBSCNvxvQs
• https://www.soas.ac.uk/cedep-demos/000_P542_EP_K3736-Demo/unit1/page_07.htm?fbcl
id=IwAR3Z9NG4BAx6dW6YAy3G8fcMZoQxIqITgEC3Cz4duyVF3eIeai6FaILp8ag
• https://open.lib.umn.edu/principleseconomics/chapter/1-1-defining-economics/
• https://www.logikfx.com/post/what-is-economics?fbclid=IwAR0dYNQuOGycKPgP7p_oa
ZM5D4mZzbfL0jTxmFlw4pOaiQcHMYQLh40dJ2Y
• https://oppgate.com/university-majors/economics/?fbclid=IwAR1xXeJscl5jKEpr00PonFU
egqTd1PvgXVwSiUwA8ivLE6UY8bVPbR8AAP0
• https://www.geektonight.com/what-is-economics/?fbclid=IwAR0MXuD0-9OjJjKtVDZb-Y
obgP6s3tixo8Re3ZGpBBCgAA01MQZSMfBqbsQ
• https://passnownow.com/economics-economic-problems-society/?
fbclid=IwAR3gtOsIQ1J_6TFGD49fYeJ_1Y0ghIdRO0evdMBGbP8DOk2VfztjUuAk2_w
THANK
YOU