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What is Economics?
Transcript of What is Economics?
Economics is the study of the use of limited resources to produce and distribute goods and services.
What Does Economics Study?
Economics is divided into two broad categories. What are they?
MICROeconomics - Study of small economic units such as individuals, firms, and industries.
MACROeconomics - Study of the large economy as a whole or in its basic subdivisions
Economics studies how individuals and societies deal with limited resources to achieve maximum satisfaction of economic wants.
Economics is the science of
Scarcity is the condition in which our wants are greater than our limited resources. Since we are unable to have everything we desire, we must make choices on how we will use our resources.
scarcity (liet. stygius, stoka, ribotumas).
You must choose between buying jeans or buying shoes.
Businesses must choose how many people to hire.
Governments must choose how much to spend on welfare.
TASK 1. Group the following concepts into 2 economic categories: micro and macro
Gross National Product
supply and demand
3 Key Economic Assumptions
1. Society’s wants are unlimited, but ALL resources are limited (scarcity).
2. Due to scarcity, choices must be made. Every choice has a cost (a trade-off).
3. Everyone’s goal is to make choices that maximize their satisfaction. Everyone acts in their own “self- interest.”
TASK 2 : Think of a particular example/situation to illustrate the assumptions.
TASK: Given the following assumptions, make a rational choice in your own self-interest
1. You have a friend abroad and want to visit him for the weekend
2. You work every weekday earning 100LT per day
3. You have three flights to choose from:
• Thursday Night Flight = 300LT
• Friday Early Morning Flight = 345LT
• Friday Night Flight = 380LT
Which flight should you choose? Why?
what have you learnt during this class?
Scarcity is the fundamental and unavoidable phenomenon that creates a need for the science of economics.
People have to make decisions about how to maximise human happiness in a world of scarcity.
Why did you choose this course?
What did you study in economics lesson last year?
What would you prefer to study this year?