1. Introduction to Economics

2. What is Economics?
A social science that studies and influences human behavior

3. The Foundation of Economics
The “Father”
Adam Smith ( )
Author of the famous book "An Inquiry into the Nature and Causes of the Wealth of Nations"

4. ECONOMICS
MICRO
MACRO

5. Micro Economics
Micro Economics studies how the individual parts of the economy make decisions to allocate limited resources

6. Satisfaction of Individual Human ‘wants’

7. Macroeconomics studies about the functioning of the economy as a whole

8. Satisfaction of collective Society ‘wants’

9. INSATIABLE WANTS + FINITE RESOURCES = THE NEED TO ECONOMISE

10. The Factors of Production
Labour
Capital
Land
Organization
Product

11. LAND – all natural resources
LABOR – human effort involved
in production
CAPITAL – machinery/equipment for manufacturing other
Goods & Services - expenditure on capital is ‘capital investment’

12. Fourth Factor of Production – Enterprise

13. A plot of land could have several possible uses:
develop shopping centre
develop office block
develop private housing estate

14. The Economic Problem
Unlimited Wants
Scarce Resources – Land, Labour, Capital
Many Uses of Resources
Choices

15. Opportunity Cost
The cost of anything in terms of other things given up or sacrificed.

16. The basic economic questions:
(1) WHAT to produce
(2) HOW to produce it
(3) WHO shall receive it