What is Economics?

1
What is Economics?

• Economics can be defined as the Social Science
  concerned with the Problem of administering or
  using Scarce Resources so as to attain the
  greatest or maximum fulfillment of societys
  Unlimited Wants.

2
Factors of Production

• Natural Resources land, minerals, water,
  forests, etc.
• Labor both physical and mental
• Physical Capital machines, tools, buildings,
  trucks, etc.
• Human Capital knowledge, education know how
  and
• Entrepreneurship the ability to organize a
  production process and take risks.

3
Production Possibilities Frontiers (PPF)

• PPF shows all the combinations of two goods that
  the full-employment use of a societys resources
  can produce in a period of time (using the best
  available technology).

Production Possibilities A B C D E F
FOOD 15 14 12 9 5 0
MACHINES 0 1 2 3 4 5
4
Production Possibilities Frontier (PPF)
Food
A
B
C
D
E
PPF
F
Machines
0
5
Decision Makers

• Households the principal owners of factors of
  production
• Business Firms the principal users of factors of
  production and
• Central Authorities the federal, state, and
  local governments and their agencies.

6
Types of Economic Problems

• What goods and services are being produced and in
  what quantities?
• By what methods are goods and services produced?
• How is the supply of goods and services allocated
  among the members of the society?
• Are the societys resources being fully employed,
  or are some lying idle?
• Is purchasing power being eroded by inflation?
• Is the economys capacity to produce goods and
  services growing over time?