Session 01: Basic Economic Concepts
Expected Learning Outcome:
At the end of this session, you will be able to learn and demonstrate your knowledge of some
basic concepts of Economics.
Economics: Definition
Economics is a social science concerned with the production, distribution, and consumption of
goods and services.
It studies how individuals, businesses, governments, and nations make choices about allocating
resources.
The Three Economic Questions
1. What to Produce?
2. How to Produce?
3. Whom to Produce For?
Factors of Production
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Land: Natural resources, including everything contained in the earth or sea.
Labor: All people who work in the economy, including full- and part-time workers,
managers, and public employees.
Capital: Money needed to start and operate a business, goods used in production, and
human skills.
Entrepreneurship: Skills of people willing to take the risk of starting their own
businesses.
Economic Products
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Goods and Services: Must be useful, scarce, and marketable (transferable). Command a
price because they are scarce in nature.
Scarcity: A condition where there are insufficient goods/services to meet consumers'
wants and needs.
Division of Labor and Specialization
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Dividing tasks among workers to increase efficiency.
Specialization helps workers focus on tasks they excel in.
Sectors of Economy
1. Primary Sector: Involves agriculture and natural resource exploitation.
2. Secondary Sector: Converts raw materials into finished goods.
3. Tertiary Sector: Provides services to businesses and consumers.