Chapter 1

Introduction to Economics
Learning Outcomes

Explain three fundamental terms in

1 economics: scarcity, choices and opportunity
costs.

Explain the three central economic

2 choices/questions that all societies face.
Getting to learn some
fundamental economics terms
Do we face scarcity?
Fundamental terms in economics

“Human wants are __________ BUT resources are relatively ________. This
causes __________. Due to scarcity, every country and individual have to
_________ how to use the limited resources. When a choice is made, the
second best option is sacrificed and this sacrifice is known as the
__________________.”
Learning Outcomes

Explain three fundamental terms in

1 economics: scarcity, choices and opportunity
costs.

Explain the three central economic

2 choices/questions that all societies face.
Three central economic choices

_________ TO _________ TO __________ TO

PRODUCE PRODUCE PRODUCE
The country has to decide The country has to decide The country has to decide
on the types and on the methods of on the distribution of
quantities of goods to be production (types and goods (who gets to
produced. quantities of resources to consume the goods and
be used/ the type of what are the quantities).
technology to be adopted).
 Limited Land

Build factories Farming Build a mall Build houses

WHAT TO PRODUCE HOW TO PRODUCE FOR WHOM TO PRODUCE

Assume: land → farming Assume: land → grow tomatoes Assume: land → grow tomatoes
What should the country grow? Farming on Land? Rural households?
Tomatoes? Carrots? Apples? Hydroponic? Urban households?
Organic? People earning high income?
Assume: land → grow tomatoes Equipment intensive? People in London?
What quantity of tomatoes needs to
be produced?
Learning Outcomes

3 Describe the three main economics systems.

4 Explain the focus of economics subject.

5 Explain the two main branches of economics.

WHAT HOW FOR WHOM
All countries in the world face these 3 central economic choices/problems.
How are these choices made? How do we get the answers to these questions?
 Let’s WATCH
a video together.

Link: https://www.youtube.com/watch?v=5Fq6PQl7fr8
For a country to decide on the 3 central economic choices,
it has to adopt an economic system.

There are THREE main

economic systems.
Three central economic systems
Command Mixed economic Free market
economic system system economic system
WHAT to produce Consumers decide; their
preferences are
communicated to
Some of the decisions are producers via price signals
made by the government
HOW to produce and some by the
Producers decide by
Government decides comparing the costs of the
individuals. various production
[Refer to elaborations for
methods
free market.]
FOR WHOM to Income earned by the
produce people decides how much
goods they can consume
Learning Outcomes

3 Describe the three main economic systems.

4 Explain the focus of economics subject.

5 Explain the two main branches of economics.

Review

State the THREE economics terms that we

learned at the start of the chapter.
Focus of economics
We covered SCARCITY, CHOICES and OPPORTUNTIY COSTS.

Economics is a social science subject that studies how

people to use the limited resources to
maximize their interests.
Learning Outcomes

3 Describe the three main economic systems.

4 Explain the focus of economics subject.

5 Explain the two main branches of economics.

 Two branches of economics
Choices of the
consumers
Choices of the
producers Microeconomics
Interaction of their
choices in a
Economics goals particular market
of a nation and
its achievement
Macroeconomics
The policies taken by the
government to achieve
these goals
Business Economics
cover both
Microeconomics: Quick preview

Price
Qty traded
in the market

Choices of the consumers: Choices of the producers:

They Demand Goods They Supply Goods
Macroeconomics: Quick preview
Macroeconomics Goals

Strong economic Low and affordable Full employment

growth COL

Macroeconomics studies a country’s achievement of the macroeconomics

goals and what the government does to achieve these goals.
 Overview of Business Economics module

Week 1-7: Test 1 (50%)

Microeconomics

Macroeconomics
Week 7-13: Test 2 (50%)
Business Economics
cover both
Overview of Business Economics module

Week 1-7: Test 1 (50%)

Week 7-13: Test 2 (50%)
Test: online
Passing condition: In total, marks 40