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Title: BASIC ECONOMIC TERMS
Description: Economics is a social science; it is the study of how people interact with each other. Individual behaviour unlike robots is not easily predictable. However, group behaviour is quite predictable and can be studied with ease. On average, economists have discovered that human beings tend to act in the same way. To better understand economics, we must define Scarcity, Choice, Opportunity Cost, Utility & The Basic Economic Problem
Description: Economics is a social science; it is the study of how people interact with each other. Individual behaviour unlike robots is not easily predictable. However, group behaviour is quite predictable and can be studied with ease. On average, economists have discovered that human beings tend to act in the same way. To better understand economics, we must define Scarcity, Choice, Opportunity Cost, Utility & The Basic Economic Problem
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Scarcity, Choice, Opportunity Cost, Utility & The Basic Economic Problem
To understand the basics of economics, we must have a firm understanding of what
economics is
...
Individual behaviour unlike robots is not easily predictable
...
On average, economists have discovered
that human beings tend to act in the same way
...
Economics therefore is the study of how
scarce resources are allocated to fulfil infinite wants and needs of consumers
...
Cars, phones
•
Services- non-physical things that cannot be touched e
...
, haircuts, insurance
•
Wants- The things that we would like to have but are not necessary for our immediate
physical survival e
...
, phones, cars etc
•
Needs- Things that we must have to survive such as food, shelter, and clothing
•
Resources
...
SCARCITY
Simply means that there is not enough of something to satisfy everyone who wants it and
therefore you must pay a price for it
...
Once you pay
a price for it, that item becomes economic good, that is, any good or service that has a price
and is thus being rationed
...
CHOICE
Life is generally about choices that people make
...
Since people do not have infinite incomes,
they make choices whenever they purchase goods and services
...
This
leads to one of the core concepts of economics: opportunity cost
...
For Example, if
you buy a cup of tea instead of a cup of coffee, the opportunity cost or your cup of tea is the
cup of coffee
...
For this reason, it will have a price and be classified as an economic good
...
UTILITY
Utility is a measure of usefulness and pleasure a consumer receives when the consumer
product
...
-
Marginal utility: The extra utility gained from consumer one more unit of a product
...
THE BASIC ECONOMIC PROBLEM
What needs to be decided in every society is WHAT are you going to produce, HOW are you
going to produce it, and FOR WHOM are you going to produce it? These are the three main
underlying economic questions that societies and companies must aim to solve
...
Title: BASIC ECONOMIC TERMS
Description: Economics is a social science; it is the study of how people interact with each other. Individual behaviour unlike robots is not easily predictable. However, group behaviour is quite predictable and can be studied with ease. On average, economists have discovered that human beings tend to act in the same way. To better understand economics, we must define Scarcity, Choice, Opportunity Cost, Utility & The Basic Economic Problem
Description: Economics is a social science; it is the study of how people interact with each other. Individual behaviour unlike robots is not easily predictable. However, group behaviour is quite predictable and can be studied with ease. On average, economists have discovered that human beings tend to act in the same way. To better understand economics, we must define Scarcity, Choice, Opportunity Cost, Utility & The Basic Economic Problem