The introduction of economics is covered in the document. The document can be used as a guide to study an introduction to economics. It will be greatly helpful for those who want to opt for Economics as a subject.
INTRODUCTION TO ECONOMICS
Definition:
Economics is a social science. It is the study of distribution of SCARCE RESOURCES to
satisfy unlimited human wants. In other words, economics is how societies and individuals make
decisions about ways to use scarce resources to fulfill their NEEDS & WANTS. This simply
means that human are provided with finite number of resources but wants are infinite.
Economics is generally categorized into TWO major categories:
Microeconomics: Meaning decision-making by individuals or groups organized into firms,
industries, etc. For example, how a company could lower its prices to increase its product
demand in the market.
Macroeconomics: Meaning the larger context i.e., decision-making by countries. It is the
aggregate performance of the entire economy. For example, the performance of the US economy.
Resolving issues about inflation, growth, employment opportunities, balance of trade etc.
Why do we need to study Economics?
If you are the owner of a business, so you need to:
Learn a way of thinking (opportunity cost of a good or service, analyzing incremental
cost or benefit arising from a choice, any unavoidable cost, efficient market)
Understands the society (economic knowledge also serves as a perimeter for managing
your own life and understanding the society.)
Understands the global economic activity (knowledge about stock market helps you in
managing your finances, better awareness of the determinants of revenue and expense for
better decision making)
Resources:
In economics, resources are any service or any other asset that is used to produce a good or
service to satisfy or meet human wants. In simple words, things needed to produce goods.
According to economists, factors of production or resources can be divided into FOUR types.
Land (natural resources)
Labor (physical or logical i.e manpower)
Capital (tools, machinery)
Entrepreneurship (investment)
But, there is an fundamental issue i.e. , SCARCITY of resources. Meaning limited resources but
unlimited wants to be satisfied.
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