Topic 1 and 2

• Economics is a social science.
• Economics studies how individuals, governments, firms and nations make choices to allocate scarce resources to satisfy their unlimited wants.
• Scarcity: Wants are greater than limited resources. We want more than what we can have.
• Choice: Because we cannot satisfy all our unlimited needs and wants, we have to make a choice about which to satisfy and which to not.
• Efficiency: Doing things in a way that makes the most out of the resources you have. Being productive and not wasting time or effort. Using resources in the best possible way to achieve the desired outcome.
• Equity: Fairness and justice in the distribution of resources and opportunities.
• Macroeconomics focuses on the Whole economy.
• Microeconomics focuses on individual parts of the economy.
• Macroeconomics focuses on inflation, unemployment and economic growth.
• Microeconomics focuses on consumer behavior, production cost, and supply and demand.
• Macroeconomics looks at government policies and their impact on overall economy.
• Microeconomics looks at individual decisions
• Needs are necessities.
• Wants are desires for goods and service's.
• Resources are land, capital, labour and entrepreneurship which is needed as inputs to produce goods and services.
• Business economy involves different management functions within a business and how to run a business efficiently.
• Labour economics is a study of the demand and supply of labour on the labour markets. It looks at training workers and their employment conditions.
• Economic history is how economies were managed in the past.
• International economics is the study of world trade and includes the international agreements that control trade.
• Positive statement is an objective statement of fact. They do not have to be correct but it must be able to prove or disprove them.
• Normative statements gives an opinion or value judgement. It cannot be proved or disproved.
• Economics use models to simplify reality in order to improve our understanding of the world.
• Needs of people are unlimited.
• Alternatives are trade-offs. All the Alternatives that we give up whenever we choose one course of action over others.
• Choice is a result of scarcity. Choice means that one alternative is selected over another.
• Opportunity cost is the value of the best alternative that could have been chosen but was not.
• Absolute scarcity describes resources that are fixed in supply and cannot be increased or decreased, regardless of demand.
• Relative scarcity occurs when goods and services are available, but you do not have the rescources to acquire them.
• Free goods is freely available in unlimited quantities.(sea, rain, sunlight)
• Economic goods are avaliable in limited quantities, often insufficient to meet needs. (Coal, petrol, electricity)
• Free goods does not command a price for it because nobody wants to pay a price on it.
• Economic goods command a price- consumers must pay for it.
• Free goods is not controlled by human beings.
• Economic goods is controlled by human beings.
• The basic process

  1. Production
  2. Exchange
  3. Consumption
• Production is the process to change recourses(inputs) into goods and services (outputs) which are brought by consumers, governments, and businesses to satisfy their needs and wants.
• The production process

  1. Inputs
  2. Processing
  3. Outputs
• Primary sector is the sector where raw materials are produced. Raw materials are

  1. Agriculture
  2. Fishing
  3. Forestry
  4. Minning
• The secondary sector is the manufacturing part in which raw materials and other inputs are used to produce goods and services.
• Intermediate goods

  1. Gold ore is produced into gold.
  2. Minerals are produced into steel.