Economics- study of proper allocation and efficient use of scarce resources to produce commodities for the satisfaction of

unlimited needs and wants of man.

Economics- “economise” As a consumer and producers, that is how to get the most out of what we have. In order to
maximize the satisfaction of human needs, they should consume what they desire and can afford

Importance; The idea that individuals weigh up costs and benefits. Economics is important for many areas of society. It can
help improve living standards and make society a better place. Economics is like science in that it can be used to improve
living standards and also to make things worse.

Goals- 1. To Strengthen economic freedom 2. Promote economic efficiency 3. Promote economic stability 4. To improve
economic security 5. Attaining a high level of growth in the coountry

Branches; Economic can be broken down into more specialized subfields the microeconomics and macroeconomics.

“Micro” Greek word- “small” it deals with the behavior of individual components such as household, firm, and individual
owner of production.

“Macro” Greek work- “big” it deals with the behavior of economy as a whole such as employment, inflation and national
income

Three basic economical Problem- The existence of scarcity creates the basic economic problem faced by every society, rich
or poor: how to make the best use of limited productive resources to satisfy human needs and wants.

1, What goods and services will be produced? ( every society must decide what goods (Tv sets, cars or rice) service health
care, education, military defense)

2. How will goods and services be produced? (Method ) Machine, human labor

3. For whom to produce? Target Market

These three basic economic problem focus on the limitation of the resources.

Factors of Production/ Resources

1. Land-
2. Labor- Human effort including the physical and mental talents of the people.
3. Capital- latin word- “Caput” means HEAD
4. Entrepreneur – combining the three factors of production to create some product and services to sell. For a profit

Economic Systems An economic system is the method used by a society to produce and distribute goods and services.
Several fundamental types of economic systems exist to answer the three questions of what, how, and for whom to
produce: traditional, command, market, and mixed.

Traditional- is the one who make a decision with a great influence of the past

For example, in tribal cultures or in cultures characterized by a caste system, people in particular social strata or
holding certain positions often perform the same type of work as their parents and grandparents, regardless of
ability or potential.

Command- the factor of production distributed and owned by the state

Example the military

Market- another way of solving allocating of resources by the individual consumer and business interact to solve economic
problem

Mixed- the combination of three fundamental factors (the private sector, minor industries such as production of candies
and cigarette (the means of production are owned by the gov. or private sector)