Basic Concepts

• Economics is a social science concerned with the problem of scarcity.
• Economics is what?

  Social Science
• Economic studies how people choose to use resources.
• Economics is about making choices.
• Individuals and businesses decisions will be on what, when and how to buy, consume and distrubute goods and services.
• Every choice made will involve trade-offs.
• Trade offs are alternatives that we must give up when we make a choice.
• The most desirable of the options you sacrifice(do not choose) is called opportunity cost.
• Human desires for goods and services.
• Our wants are unlimited.
• Needs are everything that are essential for survival.
• Demand exists if those who want to purchase it have the ability to pay for goods and services.
• Different approaches are followed, and models are used to analyse different economic situations.
• Resources are used to produce goods/services to satisfy wants and are limited in supply, making them scarce.
• Types of resources include Natural resources (sunshine, rain, crude oil), Human resources (labour), Man-made resources (machines, equipment), Entrepreneurship resources (capital).
• Scarcity is the condition where wants are greater than the limited resources: we want more than what we have.
• The problem for society is a scarcity of resources.
• In South Africa and the rest of the world, our resources: land, labour, capital and entrepreneurship are insufficient to produce all the goods and services we might want/desire.
• Efficiency is how well resources like time, money, labour and raw materials are used to deliver output.
• Fairness involves considering other people's needs and interests, not only your own.
• Share income with the poor.
• Business must not exploit clients.
• Government ensures fairness through levying taxes and the provision of services such as education, health, water, electricity, infrastructure.
• Microeconomics is concerned with the behaviour of individual entities such as households, firms, governments and markets.
• Macroeconomics is concerned with the overall performance of the economy.
• Econometrics applies the tools of statistics to economic problems.
• Business Studies involves the different management functions within a business and how to run a business enterprise efficiently.
• Development Economics deals with economic aspects of the development process in low-income countries.
• Monetary Economics studies the policies of central banks and other financial institutions such as general (commercial) and investment banks.
• Environmental Economics is concerned with the state of the natural environment of the earth, e.g. climate change.
• Physics and economics have a close tie and this developed into a new field of study called econophysics.
• Commercial Law are the laws of business which the government will set out and economists determine how these laws will affect the happenings of the economy.
• Business Studies involves entrepreneurs using the factors of production: land, labour, capital and entrepreneurship to run a business.
• Biology states that evolution favours individuals who adapt well to a situation and there are many theories from Biology that have been applied to Economics.
• History maintains the records of the past and enables the understanding of the economics of a country.
• Quantitative research methods are used to study economic problems such as supply and demand, economic decision making, scarcity and government intervention.
• Accounting analyses the variables related to goods and services, such as the production, consumption and trade.
• Ethics is the science of moral conduct and asks the question, "what ought to be?", which is a question that concerns all economists.
• Mathematical methods are extensively used in Economics.
• Politics is the science of the state and the state will influence the way people make a living and people will influence the decisions of the state.