2. ECONOMICS
• Oikos- household
• Nomos- Management
• HOUSEHOLD MANAGEMENT
• Understanding how household or society
manage/allocates its resources (scarce)
• SCARCITY- the state of being scarce or in
short supply; shortage.
3. WHY IS THERE A SCARCITY
• According to Thomas Malthus it is because
of POPULATION
• But according to John Stuart Mill,
population is not the reason behind scarcity
rather it helps to sustain/preserve the
limited resources.
• BUT HOW?
4. WHY IS THERE A SCARCITY
• For J.S.Mill, population tends to rise so
therefore scarcity is “natural”.
• He believes that in order to alleviate scarcity,
WE HAVE TO BALANCE AND RIGHTLY
ALLOCATE OUR RESOURCES
• There should be a proper distribution,
production and consumption
5. ECONOMICS
SO IN SHORT
• Study of what constitutes rational human
behavior to fulfill needs and wants but
considering and understanding how
society should allocates its scarce
resources.
6. HOW DO WE RIGHTLY
ALLOCATE OUR
RESOURCES?
It is by making right decisions
10. MICROECONOMICS
• Microeconomics- it deals with the economic
behavior of individuals such as consumers
and producers
• How do they decide what to buy, what to sell,
what to produce etc.
11. MICROECONOMICS
• It also deals with Price Theory
• A theory that states that the price for a
specific good or service is determined
by the relationship between its supply
and demand at any given point.
12. MACROECONOMICS
• Macroeconomics- it deals with economic
behavior of the whole economy such as
unemployment, inflation, economic growth
etc.
• It is the study of an entire economy.
13. ECONOMICS
• There are five economic resources:
• Land- Gift of nature
• Labor- Human resources/ man power
• Capital- This includes money
• Entrepreneurship- People who run the
business
18. ECONOMICS as SOCIAL SCIENCE
• Economics is regarded as a social
science because it uses scientific methods to
build theories.
• What is a theory?
Often means an untested hunch, or a guess
without supporting evidence.
• BUT… (next page)
19. ECONOMICS as SOCIAL SCIENCE
• BUT it is a well-explained of an aspect of
the natural world that can incorporate laws,
hypotheses and facts.
20. ECONOMICS as SOCIAL SCIENCE
• Economics is regarded as a social
science because it uses scientific methods to
build theories that can help explain the
behavior of individuals, groups and
organizations.
• Example:
The Law of Diminishing Marginal Utility/ Marginal Theory-
examines the increase in satisfaction consumers gain from
consuming an extra unit of a good
21. ECONOMICS as SOCIAL SCIENCE
• Do you agree that as you consume a lot of
something you would be less satisfied?
23. ECONOMICS as APPLIED SCIENCE
• Economics is regarded as an applied
science, as opposed to social
science, because it is a study of economics
in relation to real world situation.
• Meaning…
It is the application of economic
principles and theories.
24. ECONOMICS as APPLIED SCIENCE
• In short….
Applied economics is the study of how
theories work in the real world.
• For example: (next page)
25. ECONOMICS as APPLIED SCIENCE
• Example:
• Econometrics which is the application of statistical
and mathematical theories for the purpose of:
1. testing hypothesis/theories
Example: The Law of Diminishing Marginal Utility
2. predicting future outcome
Example: The pizza parlor will innovate their pizza
26. TO SUMMARIZE…
• Economic Theory is all about thinking
things up, while Applied Economics is
about trying things out
• Example… (next page)
27.
28. ECONOMICS
Importance of both:
• It helps assess the economy of the country
• Economic as Social Science helps us
understand the theories
• Economics as Applied Science help us apply the
theories
• BOTH help the country maximize its limited
resources to satisfy all the needs and wants of
the population to avoid ECONOMIC
PROBLEMS.
