Essay on Economics

4953 Words Feb 29th, 2016 20 Pages
BASIC ECONOMIC CONCEPTS

LESSON 1: BASIC ECONOMIC CONCEPTS
By the end of this lesson, you should be able to






give an overview of Economics deal with the Economic Problem discuss the Methodology in Economics differentiate between Microeconomic Issues and
Macroeconomic Issues

1.1 WHAT IS ECONOMICS?
Some opinions:
“Supply and Demand - that’s all there is to economics. The rest is nonsense.”
“Economics is about what everyone knows in a language that nobody understands.”
“Economics explains the price of everything and the value of nothing.”
“Economists are quite unique in their failure to solve a single one of the problems of their profession.” John Papworth
Economist– the one profession where you can gain great eminence without ever
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This leads people to make choices and therefore they have to give up some things for other things. The Economic Problem

LIMITED RESOURCES

UNLIMITED WANTS

SCARCITY
An insufficiency of means in relation to wants

CHOICE

OPPORTUNITY COSTS
The ‘methods’ definition focuses on how economists deal with problems rather than the problems themselves. (i.e. the Scientific method)
They see Economics as supplying a ‘tool kit’ to explain the economic dimensions of human behaviour. Combining both views of Economics we can define Economics as the study of how individuals and societies deal with scarcity and the development of methods for analysing such problems.

MDIS

1–2

Introduction to Economics

BASIC ECONOMIC CONCEPTS

1.2 PRODUCTION AND CONSUMPTION - the satisfaction of wants
Economics begins with a study of human ‘wants’. By ‘wants’ the economist means material wants — everyone air, food and water to support life (basic wants); we also want more advanced things such as comfortable homes, education, entertainment, transport etc.
Our wants can be satisfied by the enjoyment (consumption) of goods and services. Goods are tangible items such as food, clothing, housing, furniture, motor cars, television sets, books, etc. -these are called consumer goods. (There is another class of goods called
Producer goods which do not yield personal satisfaction to consumers but are used to

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