Lesson-1-The Economics-as-a-Science.pptx

Intro to economics

1. Economics as a Social and Applied Science

2. Greek word “ oikonomia ” meaning “household management ” Economics is a social science that deals with the study of scarcity and how resources can be effectively allocated to respond to unlimited human needs and wants. What is Economics?

3. Economics is a science – a body of systematized knowledge built upon conscious efforts Economics is a social interaction – there is required communication and interaction of people in the society Economics as a social science – relationship established in the production and consumption and how people logically interact within markets Basic Economic Concepts

4. Scarcity – fundamental economic problem; tension between the limited resources and unlimited human needs and wants Basic Economic Concepts Needs and Wants – are essential and non-essential for survival respectively Allocation – systematic distribution of resources Opportunity Cost – value of what is foregone in order to have something else Trade-off – making a choice by sacrificing something in return

5. F ree gifts of nature which includes all natural resources above, on, and below the ground Payment: Rent Capital Land Entrepreneur Labor ECONOMIC RESOURCES All human efforts, be it mental or physical that help to produce goods and services Payment: Wages and Salaries Monetary or major physical assets used in producing goods and services Payment: Interest The organizer, coordinator of other factors of production: land, labor, and capital Payment: Income Basic Economic Concepts

6. MICROECONOMICS Economic behavior of the whole economy or its aggregates MACROECONOMICS Economic behavior of individual units such as consumers, firms, and the owners of the factors of production Production Distribution Exchange Consumption Process of creating goods Refers to the marketing of goods and services The transfer of goods or services to a person in return of something Utilization of economic goods Public Finance Activities regarding taxation, borrowings, and expenditures Divisions of Economics Branches of Economics

7. Study of economics in relation to real world situations, as opposed to the theory of economics It is the application of economic principles and theories to real situations, and trying to predict what the outcomes might be. Economics As An Applied Science

8. It is a powerful tool that enables the true and complete picture to emerge, so that it becomes possible to decide what to do and where to go from the current position. Key Reasons to Apply Economic Theories to Current Economic Conditions It acts as a mechanism to determine what steps can reasonably be taken to improve the current economic situation. Applied economics can teach valuable lessons on how to avoid the recurrence of a negative situation, or at least minimize the impact.

9. How to Produce? What to Produce? For Whom to Produce? BASIC ECONOMIC QUESTIONS