Nature and Scope of Economics

HND Business Management
Business Economics

NATURE & SCOPE OF
ECONOMICS

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What is Economics?
Issue in economics  Macroeconomics  Microeconomics
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Lecture 1 (c) Copyright MFA 11

Nature and Scope of Economics  All About Economics
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Want and Desires  Scarcity  Economic Problems  Opportunity Cost
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Production Possibility Curve(PPC)
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Shift of The PPC.

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Lecture 1 (c) Copyright MFA 11

WHAT IS ECONOMICS?

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Issues in Economics
Demand
Competitiveness

Microeconomics
Supply

Macroeconomics
Economic Growth & Development
Unemployment

Inflation
Money Supply

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MICROECONOMICS

Microeconomics:

deals with the economic problems of the individual, the firm, and the industry

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MACROECONOMICS

Macroeconomics:

deals with the aggregates of economics - total production, total employment, and general price level

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NATURE AND SCOPE OF ECONOMICS
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Economics is important to the
(a) Individual (b) Businessman (c) Government

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 Economics

deals with how scarce resources are allocated to maximize the unlimited wants that we want to fulfill.

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Lecture 1 (c) Copyright MFA 11

SUPPLY

RESOURCES
e.g. Time, Land, People

DEMAND
WANTS

e.g. Designer Jeans, MP3 Players, Motorbike, Banking 8 services

WHAT IS ECONOMICS ALL ABOUT?
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Wants and desires:
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Humans wants are unlimited. Some wants are more important than others. Some wants are more easily satisfied than others. Wants are for both present and future consumption.

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Our wants are unlimited but we have the problem of scarcity in:
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Natural resources Time and energy Monetary problems or financial constraints Factors of production i.e. Material, Labour, Capital and Enterprise.

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As our wants are unlimited and innumerable while our resources for satisfying them are limited and scarce, not all our wants can be satisfied. Hence, a choice has to be made.

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BASIC ECONOMIC PROBLEMS
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Five basic economic problems faced by all countries are:
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What to produce? How to produce and how much to produce? For whom to produce? When to produce? Where to produce?

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WHAT IS ECONOMICS ALL ABOUT?
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Opportunity cost can be defined as the next best alternative forgone, i.e. something which must be sacrificed in order to obtain something else.
Examples of opportunity costs for the individual:
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Between work or leisure Present consumption or savings Revision or playing games.

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Examples of opportunity cost for the producer:
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Labour or Capital Site A or B.

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Examples of opportunity cost for the government:
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Military goods or civilian goods Guns or butter.

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Q& A THANK YOU

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Lecture 1 (c) Copyright MFA 11