Scarcity, choice and opportunity cost.
Fundamental economic problem
Scarce resources and Unlimited Wants
The fundamental economic problem means that individuals, firms
and governments have to make choices due to the scarcity of
resources.
Opportunity cost
the cost of the choice in terms of the next best alternative.
Three Economic Questions
What to
produce?
How to
produce?
For whom to
produce?
Economic Methodology
What is Economics?
‘the study of how to allocate scarce resources in the most efficient way’
Division In Economics
Microeconomics
studies about the actions of
an individual unit
an individual, firm, household,
market, industry, etc.
Macroeconomics
studies the economy as a
whole
firms, households, nation,
industries, market, etc.
Positive and normative statements
refer to what will happen,
based on actual
evidence or observation
Ceteris paribus
The margin
statement can no longer
be proven and statements
that express a value
judgement
situation where ‘other things
remain equal’ or are unchanged
small change
in one variable,
will lead to further
changes in other variables