Definition

Economics is the study of how people try to satisfy what appears to be seemingly unlimited and competing wants through the careful use of relatively scarce resources. It is the

branch of knowledge concerned with the production, consumption, and transfer of wealth.

"Dismal Science"

Dismal Science is alternative name for economics coined by the Victorian historian Thomas Carlyle in the 19th century. The term dismal science was inspired by T. R. Malthus' discouraging prediction that food will become scarce due to population always increasing.

 

 

The Fundamental Economic Problem

The fundamental economic problem facing all societies is that of scarcity; the condition that results from society not having enough resources to produce all things people would like to have.

Three Basic Questions

WHAT to produce?

HOW to produce?

FOR WHOM to produce?

The Factors of Production

Land

Capital

Labor

Entrepreneurs

 

 

Together, they create production!

The Scope of Economics

Description-

Description is important because we need to know what the world around us looks like.

Analysis-

Analysis is important because it helps us to discover why things work and how things happen.

Explanation-

Explanation is important because if we all have a common understanding of the way our economy works, some economic problems will be much easier to address or even fix in the future.

Prediction-

Prediction is important because the study of economics helps all of us to become more informed citizens and better decision makers.