What is Economics ?
The study of how a society chooses to
use scarce resources to produce
goods and services and to distribute
them for consumption
A nation’s resources consist of three broad areas:
Natural, Capital and Labor.
Natural Resources -
Resources provided in limited amount by nature, such as
oil, coil, water and timber.
Capital Resources -
Goods produced for the purpose of making other
types of goods and services.
Labor Resources –
The human talent, skills and competence, available in
A nation’s resources are used to produce goods and
services that will meet people’s needs and wants.
Needs are goods and services people must have
simply to exist.
Wants, on the other hand, are things they would like
to have but do not absolutely need for survival.
Such items are _
Food, clothing, shelter and medical care are needs.
Video recorders, fashionable clothes, sound
systems etc are wants.
The process of choosing how resources will be used to meet
a society’s needs and wants; includes the distribution of
products to consumers.
We have a basis for choosing how our resources will be
used, how they will be allocated to the best satisfy
consumers wants and needs.
In this context, allocation involves an exchange (
e.g., money, goods, time, service) between a
business and a consumer ( e.g., client, customer,
The exchange provides mutual benefit. This is
important for free economy.
The accepted process by which labor, capital and natural
resources are organized to produce and distribute
distribute goods and services in a society.
An economy in which the government owns the
productive resources, financial enterprise, retail
stores and banks.
Understanding economics is essential to Understanding
business. No single definition of economics satisfies
everyone. Here resources, goods and services,
allocation, economic system and others all the
combination make Foundation of Business in Economics.