What is Economics?

The study of economics is concerned with how countries use their resources to satisfy the needs and wants of different economic agents.

Resources are called Factors of Production

Land            natural resources                raw materials
Labour         human resources                workers
Capital           man made resources        machines
Enterprise     individual initiative            business people

 

The difference between a need and want:

Need: something which is essential for life, eg food

Want: something which improves the quality of life, eg holidays abroad

 

Economic agents will want to do the best for themselves

Individuals:      maximise the their own welfare (utility)
Workers:       maximise pay and non pay rewards
Firms:            maximise profit
Government:     maximise the welfare of the people

 

Economics is therefore concerned with examining how countries use their factors of production to meet the needs of different economic agents, and also improve the overall quality of these agents

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