L1: Nature & Scope of Economics

• economics

  • is a social science that studies the production, distribution, and consumption of goods and services.
• Applied Science

  • it uses the scientific method in its explanations, which consists of observing reality and presenting questions and problems to formulate theories and models.
• Economics

  • is a SOCIAL SCIENCE concerned with explaining and predicting observed phenomena in society.
• Two perspectives on the economy:

  1. Microeconomics
  2. Macroeconomics
• Microeconomics

  • focuses on the behavior of individual economic units and the functioning of markets. Its perspective focuses on parts of the community: individuals, firms, and industries.
• Macroeconomics

  • studies the functioning of economics as an aggregate production and employment. Its perspective looks at the economy as a whole. has two types of policies: monetary policies and fiscal policies.
• The Economic Agents

  • the agents interact among themselves in a specific territorial, social, natural and/or cultural framework that determines their relationships market.
• The Economic Agents

  1. Consumer
  2. Producer
  3. The Public Sector
• GOODS

  • are defined as items that satisfy human wants, provide utility or usefulness, and are scarce (have limited availability).
• TANGIBLE GOODS

  • material goods or commodities
• INTANGIBLE GOODS

  • they are in the form of services.
• GOODS MAY ALSO BE CLASSIFIED ACCORDING TO USE:

  1. Consumer Goods
  2. Capital / Industrial Goods
  3. Essential Goods
  4. Luxury Goods
  5. Economic Goods
• Consumer Goods

  • goods for the ultimate consumption of the consumers.
• Capital / Industrial Goods

  • used in the production of other goods and services.
• Essential Goods

  • used to satisfy the basic needs of man.
• Luxury Goods

  • goods man may do without, but may give comfort and satisfaction
• Economic Goods

  • goods that are useful and scarce, with value attached to them and a price has to be paid for their use. If a good is so abundant and it can satisfy everyone’s needs without anybody paying for it, that good is free.
• Economic Resources or Factors

  • are the factors or production for goods and services to make an economic profit for the firms
• Economic Resources or Factors

  1. Land
  2. Labor
  3. Capital
  4. Entrepreneurship
• Social Science

  • study of people