Economics Notes: Introduction to Economics
1. What is Economics?
Economics is the study of how individuals and societies allocate scarce
resources to satisfy unlimited wants.
Two main branches:
oMicroeconomics – studies individual markets and decision-
makers.
oMacroeconomics – studies the economy as a whole (inflation,
unemployment, growth).
2. The Economic Problem
Scarcity: Limited resources vs. unlimited wants.
Choice: Because of scarcity, choices must be made.
Opportunity Cost: The next best alternative foregone.
3. Factors of Production
1. Land – natural resources
2. Labour – human effort
3. Capital – man-made goods used in production
4. Enterprise – entrepreneurs who organize production
4. Economic Agents
Households: consume goods and services.
Firms: produce goods and services.
Government: sets economic policies and provides public goods.
5. Economic Systems
Market Economy: resources allocated by market forces.
Command Economy: government makes all economic decisions.
Mixed Economy: combination of market and government intervention.
