Introduction to

ECONOMICS

Prepared by: Arnel O. Rivera MAT-SS

What is Economics?
Economics

is the study of the allocation of resources among alternative uses to attain desired ends. It is a branch of social science which deals with the study on attaining human wants and needs.

Divisions of Economics
Macro

Economics

The study of economics as a whole. It is concerned with issues and problems concerning the overall economy of a nation or the world.

Divisions of Economics
Micro

Economics The study of individual parts of the economy.

It is concerned with issues and problems facing the individual components of the economy (supply, prices of goods etc..)

Divisions of Economics
Prices of Goods

Supply

Demand

Alternate Goods

Needs and Wants

Needs These are goods and services that people needs in order to live. Without these things, people cannot survive.

Needs and Wants

Wants These are goods and services that makes the lives of people easier and comfortable. People can do away with wants, but it makes their lives more meaningful.

Points to Remember
Wants

and Needs vary from one person to another.

Example: To an office worker, a cellphone is considered as a need but to a farmer it is a want.

Wants

and needs are never satisfied.

Example: Cellphone models changes as time goes by. It may be in today but will become obsolete in the future.

Economic decision

We have unlimited wants and wish to satisfy those wants with available resources, we have to make choices. Economic choice involves the attainment of desired ends through the allocation of these scarce resources among alternative uses.

Factors that affect Economic Decisions

Desired ends whatever goal or objective is identified as urgent. Allocation distributing resources so that the desired ends are satisfied, partially satisfied or not satisfied at all Alternative uses refers to the many different choices which are equally appealing

Scarcity
Scarcity

exists when the resources of the economy are not enough to meet the wants or needs of people or the society.

Types of Scarcity
Scarcity when resources needed to satisfy wants and needs are not available Psychological Scarcity when resources are available but cannot be used by the person or entity to satisfy their wants or needs
Physical

Points to Remember
To

attain wants and needs, people must make use of wise economic decisions to prevent scarcity. This can only be achieved by a comprehensive understanding of the basic principles of economics.

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