Chapter 1: Introduction to Economics
- What is Economics?
Economics is the study of how people use limited resources to satisfy their unlimited wants.
It deals with choices made by individuals, businesses, and governments when resources like money, time,
and materials are limited.
- Types of Economics
1. Microeconomics:
- Deals with individual units like consumers, firms, etc.
- Example: How much should a firm produce? What price should it charge?
2. Macroeconomics:
- Deals with the economy as a whole.
- Example: National income, unemployment, inflation.
- Economy
An economy is a system that decides:
- What to produce?
- How to produce?
- For whom to produce?
- Economic Activities
Economic activities involve production, distribution, and consumption of goods and services.
Examples: Farming, manufacturing, services like banking, teaching, etc.
- Scarcity and Choice
- Scarcity: Resources (like land, labor, money) are limited.
- Choice: Since we cant have everything, we have to choose what to produce and what to give up.
Example: A farmer has one acre of land should he grow rice or wheat?
- Central Problems of an Economy
