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Economy

Economics is the study of how goods and services are produced, distributed, and consumed. It can be studied through two branches: macroeconomics which examines economies as a whole, and microeconomics which focuses on individual behavior of people and businesses. The summary defines key economic terms including labor, capital, goods/services, resources, and entrepreneurship. It explains that economics investigates human behavior and choices within economic systems, but can never be an exact science due to the complexities of human decision-making.

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Sofia Mae Faeldonia
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26 views14 pages

Economy

Economics is the study of how goods and services are produced, distributed, and consumed. It can be studied through two branches: macroeconomics which examines economies as a whole, and microeconomics which focuses on individual behavior of people and businesses. The summary defines key economic terms including labor, capital, goods/services, resources, and entrepreneurship. It explains that economics investigates human behavior and choices within economic systems, but can never be an exact science due to the complexities of human decision-making.

Uploaded by

Sofia Mae Faeldonia
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Chapter 1

Introduction
to Economic
theory
OBJECTIV
ES
• Define the basic terms in Economics
• Explain the nature of Economics as a
Science
• Discuss the concept of choice in
Economics
'Labor was the first price, the original
purchase-money that was paid for all
things. It was not by gold or by silver, but
by labor, that all wealth of the world was
originally purchased.

—Adam Smith
What is economic?

Economics is a social science that studies how products and


services are produced, distributed, and consumed as well as
the decisions that people, firms, governments, and nations
make when allocating resources. The famous father of
economics, Adam Smith, defined economics as "an inquiry
into the nature and cause of the wealth of the nations." a
social science focused on the issue of how to employ limited
resources to meet human needs.
There are two branches of economics which are macroeconomics
and microeconomics.
• A branch of economics known as macroeconomics studies how
an economy as a whole performs, is structured, behaves, and
makes decisions.
• Microeconomics is a branch of economics that examines how
people and businesses behave when deciding how to distribute
scarce resources and how these people and businesses interact.
BASIC TERMS IN
ECONOMICS
Economi
Goods and c
services Resource Labor

The study of the workforce as a


An economic system's output is Economic resources are also component of the production
goods and services. Services are known as factors of production process is known as labor
tasks carried out for the benefit of are the resources that are used economics. All people who work
the recipients, whereas goods are for carrying out economic for pay in the labor market,
physical commodities offered to activities. Factors of production whether as employees,
clients. Examples of goods are are the inputs into the employers, or self-employed
appliances, shoes, phones, etc. production process, such as land people, as well as those who are
Examples of services are house labor, capital, and jobless but looking for work, are
cleaning, hair salon, doctors, etc. entrepreneurship. considered to be part of the labor
force.
BASIC TERMS IN
ECONOMICS

capital entrepreneur scarcity

Someone who has an idea and alludes to a fundamental


Refers to the total amount of strives to develop a good or economics issue—the
money needed to produce service that customers will discrepancy between scarce
goods or services. This money purchase, together with a resources and supposedly
may be employed to start up company to help with that effort. infinite wants. In order to meet
operations, cover ongoing An entrepreneur is seen as a both basic necessities and as
costs, or develop and extend visionary or an innovator since many additional wants as
the company they take on the majority of the feasible, people need to decide
risk and responsibility for their how to spend resources
new company. effectively.
Nature of Economic as a Science

Is economics a science ? This question has a "yes and no"


response. Economics is a different kind of discipline than,
say, physics or chemistry and can never be an exact science.
Science's fundamental component is prediction. We are told
what we believe must occur by physical "rules." The
recognized principles of physics state that if you throw a
pencil out of an upstairs window, it will inevitably land on
the ground.
Nature of Economic as a Science

Due to its investigation of society and human behavior, economics is a


social science. It focuses on how economic players distribute scarce
economic resources to satisfy their needs and desires. Paul
Samuelson, an economist, said, “economics is the queen of the social
sciences.”
Economic actors comprise three groups which are households,
businesses and government. Every choice made in the three areas is a
personal choice. People take on various roles. It has an impact on
their behavior, the decisions they make, and how they make them.
Nature of Economic as a Science

As households, individuals act as consumers. They therefore aim


to increase utility (pleasure) when consuming goods and services.
In business, individuals decide how to manufacture goods and
services. They want to maximize their earnings.
In the government sector, regulators and public policy makers are
individuals. They decide not just about people (society), but
also about corporations.
TYPES OF ECONOMIC SYSTEM

The Command
Economy
A crucial component of a political system
in which the quantity of output that is
The Traditional Economy permitted and the prices that may be paid The Market Economy
for goods and services are determined by
A fundamental economic structure in which a central governing authority. A market economy is a kind of
trade and commerce are governed by capitalism in which a nation's
customs and traditions. In a self-sufficient businesses and citizens interact to
economy, various activities are carried out determine economic policy and the
by the community to produce the goods or cost of goods and services.
services needed by the rest of the
community.
TYPES OF ECONOMIC SYSTEM

The mixed
Economy
A system that has elements of both capitalism
and socialism. A mixed economy protects private
property and permits some economic freedom in
the use of capital, but it also permits government
intervention in the economy to further social
objectives.
sUMM
ARY
People who study economics are better able to
comprehend their surroundings. It makes it possible
for people to comprehend other people,
organizations, markets, and governments, enabling
them to better react to the challenges and
possibilities that arise when circumstances change.
A major in economics helps people achieve
regardless of the future. People can make better
judgments and solve more issues if they understand
how markets operate, how rules affect results, and
how economic forces shape social institutions.
Success in work and in life can be attained in this
way. Students need to know and understand the
basic terms of economics which are labor, capital,
goods and services, economic resources, scarcity
and entrepreneurship.
THANK YOU AND GOD BLESS!

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