week 1 CHAPTER 1: INTRODUCTION ECONOMY ISSUES

DEFINITION

Economy study the behavior in allocating and distributing limited resources to fulfill unlimited demands.

Microeconomics study of small units of economy which focuses on price and quantity
Macroeconomics study of entire economy in the country including inflation and unemployment

• POSITIVE VS NEGATIVE ECONOMIC STATEMENTS

• BASIC ECONOMY CONCEPT

SCARCITY , CHOICES, OPPORTUNITY COST

The world has limited resources or limited factors of production (labor, capital, land and entrepreneurship). These limited resources are met with the unlimited wants of all societies. This results in the economic problem of scarcity.

And it is because of this problem of scarcity that the rational man is forced to make a choice . Making a choice means that you have to face an opportunity cost .Opportunity cost is the second best alternative forgone by making a choice.

So, limited resources lead to the economic problem of scarcity. This in turn, forces economic agents to make choices and thus incur opportunity costs. 

FACTORS OF PRODUCTION

1. Land: The quality of land is based on location.
2. Labour: Workers that contribute in the production process.
3. Capital: Machines, buildings that are used to run the business.
4. Enterpreneurship: Individuals that has skill to manage business to produce profit.