, CHAPTER 1:
INTRODUCTION TO ECONOMICS
DEFINITION OF ECONOMICS
BASIC ECONOMICS CONCEPTS
PRODUCTION POSSIBILITIES CURVE
BASIC ECONOMIC PROBLEMS
, Factors of
production
The word ‘economy’ comes from a Greek word which means ‘one
who manages a household’ Resources used by firms to
produce goods and
services during the
production process
Economics or political economy is an
enquiry into the nature and cause of 1. Land
the wealth of nations • Natural resources
• E.g Earth and land
• Return - rent
2. Labour
Adam Smith (1776) • People who
contribute their
energy mentally &
physically
Economics is the science of how a
• Skilled, semi-
particular society solves its economic skilled, unskilled
problems • Return – wages,
salary
3. Capital
• Wealth used for
Milton Friedman (1962)
production
• E.g machinery,
tools &
equipment,
Economics is the study of scarce building, factories
resources to satisfy unlimited human • Return - interest
wants 4. Entrepreneur
• A person who
organizes the
other factors of
Richard Lipsey (1990) production
• Has the ability to
plan, organize,
Definition direct & control
• Able to take risks
Social science that studies how society allocates scarce resources to
fulfil their unlimited wants
*these four factors of production
are scarce and society should try to
Society is divided into four main groups: use them efficiently in the process
1. Households of fulfilling their unlimited wants
2. Firms
3. Governments
4. Foreign sectors
INTRODUCTION TO ECONOMICS
DEFINITION OF ECONOMICS
BASIC ECONOMICS CONCEPTS
PRODUCTION POSSIBILITIES CURVE
BASIC ECONOMIC PROBLEMS
, Factors of
production
The word ‘economy’ comes from a Greek word which means ‘one
who manages a household’ Resources used by firms to
produce goods and
services during the
production process
Economics or political economy is an
enquiry into the nature and cause of 1. Land
the wealth of nations • Natural resources
• E.g Earth and land
• Return - rent
2. Labour
Adam Smith (1776) • People who
contribute their
energy mentally &
physically
Economics is the science of how a
• Skilled, semi-
particular society solves its economic skilled, unskilled
problems • Return – wages,
salary
3. Capital
• Wealth used for
Milton Friedman (1962)
production
• E.g machinery,
tools &
equipment,
Economics is the study of scarce building, factories
resources to satisfy unlimited human • Return - interest
wants 4. Entrepreneur
• A person who
organizes the
other factors of
Richard Lipsey (1990) production
• Has the ability to
plan, organize,
Definition direct & control
• Able to take risks
Social science that studies how society allocates scarce resources to
fulfil their unlimited wants
*these four factors of production
are scarce and society should try to
Society is divided into four main groups: use them efficiently in the process
1. Households of fulfilling their unlimited wants
2. Firms
3. Governments
4. Foreign sectors
