Economics Term 1 Notes:
1. What is Economics?
Economics is the study of how goods and services are produced,
distributed, and consumed. It focuses on how individuals, firms, and
governments make choices when resources are limited.
Lionel Robbins (1935):
Economics is the study of human behaviour as a relationship between unlimited
wants and scarce resources which have alternative uses.
2. Human Wants, Resources & the Economic Problem
Human wants are unlimited (food, clothes, cars, technology).
Resources are limited.
Therefore, it is impossible to satisfy all wants.
The Economic Problem
➡️ The economic problem exists because unlimited wants exceed limited
resources.
3. Scarcity
Scarcity means that there are not enough resources to satisfy everyone’s
wants. Scarcity forces people to make choices.
4. Factors of Production (Resources)
These are the inputs used to produce goods and services.
1. Land – natural resources (land, rivers, minerals)
2. Labour – human physical and mental effort
3. Capital – man-made goods used in production (machines, factories)
4. Enterprise – organises resources, takes risks, makes decisions
5. Economic Goods and Free Goods
Economic goods:
o require resources
o have an opportunity cost
o e.g. books, furniture
Free goods:
, o do not require resources
o have no opportunity cost
o e.g. air, sunlight
6. Production and Consumption
Production: using resources to make goods and services.
Consumption: using goods and services to satisfy wants.
7. Capital Goods and Consumer Goods
Capital goods: used to produce other goods (machines, tools)
Consumer goods: bought for personal satisfaction (food, clothes)
📌 Goods are classified by use, not by nature.
8. Mobility of Factors of Production
Land
Occupationally mobile (farming → housing)
Geographically immobile
Labour
Geographic immobility: family ties, housing costs, lack of information
Occupational immobility: lack of skills or qualifications
Capital
Mobile: computers, vehicles
Immobile: ports, bridges
Enterprise
Most mobile factor
Entrepreneurs can change location and industry easily
9. Quantity and Quality of Factors
Land
1. What is Economics?
Economics is the study of how goods and services are produced,
distributed, and consumed. It focuses on how individuals, firms, and
governments make choices when resources are limited.
Lionel Robbins (1935):
Economics is the study of human behaviour as a relationship between unlimited
wants and scarce resources which have alternative uses.
2. Human Wants, Resources & the Economic Problem
Human wants are unlimited (food, clothes, cars, technology).
Resources are limited.
Therefore, it is impossible to satisfy all wants.
The Economic Problem
➡️ The economic problem exists because unlimited wants exceed limited
resources.
3. Scarcity
Scarcity means that there are not enough resources to satisfy everyone’s
wants. Scarcity forces people to make choices.
4. Factors of Production (Resources)
These are the inputs used to produce goods and services.
1. Land – natural resources (land, rivers, minerals)
2. Labour – human physical and mental effort
3. Capital – man-made goods used in production (machines, factories)
4. Enterprise – organises resources, takes risks, makes decisions
5. Economic Goods and Free Goods
Economic goods:
o require resources
o have an opportunity cost
o e.g. books, furniture
Free goods:
, o do not require resources
o have no opportunity cost
o e.g. air, sunlight
6. Production and Consumption
Production: using resources to make goods and services.
Consumption: using goods and services to satisfy wants.
7. Capital Goods and Consumer Goods
Capital goods: used to produce other goods (machines, tools)
Consumer goods: bought for personal satisfaction (food, clothes)
📌 Goods are classified by use, not by nature.
8. Mobility of Factors of Production
Land
Occupationally mobile (farming → housing)
Geographically immobile
Labour
Geographic immobility: family ties, housing costs, lack of information
Occupational immobility: lack of skills or qualifications
Capital
Mobile: computers, vehicles
Immobile: ports, bridges
Enterprise
Most mobile factor
Entrepreneurs can change location and industry easily
9. Quantity and Quality of Factors
Land
