Want to know Economics? Then this is for you.

2. Originof economics
The word “economics” is derived from two Greek words:
•Oikos - a house
•Nemein - to manage
In simple terms, it means “managing a household” using
the limited funds or resources available, in the most
satisfactory and best manner possible.

3. What is Economics?
1. Economics is the study how human allocate resources
which are limited to satisfy the unlimited wants.
2. Alternatively, it is the science that deals with production,
exchange and consumption of various commodities in
economic systems.
3. It is all about the ability to satisfy endless needs using
limited resources.

4. Social Sciences Relatedto Economics
Economics as social science
• Social science is a study of society or parts of it by making use of the scientific
method of observation, hypothesis formulation, testing and experimentation.
• Economics therefore tries to understand how members of a society behave and
organize themeselves to meet their individual and communal material needs and
wants.
Anthropology
• Covers the biological, psychological, social and cultural aspects of human life.
• It studies every element of human society (incl. language, the belief system, etc.)
Psychology
• Studies society from the viewpoint of the individuals and groups.
• It finds out how society influences the individual's personality and how the
individual responds to social stimuli and pressures.
Sociology
• Studies society by analysing human groups, institutions and social relationships.
• It analyzes the social patterns that result from numerous individual reactions.

5. Why study economics?
• The main reason for studying economics is scarcity.
• Scarcity in economics is regarded as the fundamental
economic problem asrising from the fact that, while
resources are finite or limited, the society's demand
(wants) for resources in infinite, endless or unlimited.
Example:
• Wants: iPhone, jeans, food, alcohol, sneakers, etc.
• Resources: Income = R4500
 So, scarcity arises because resources are finite or limited
whilst wants are infinite or unlimited. This is also known as
“the basic economic problem”.

6. Branches of Economics
 Business cycles: the study of the regular flactuations in economic activities.
Periods of increasing and decreasing economic activities.
 Development economics: the study of policies and actions that can result in
an increase in the standard of living and economic welfare.
 Econometrics: the study of the application of statistical methods in
economics, e.g. time series models, forecasting and extrapolation.
 Environmental economics: the study of the economic importance of the
environment for sustainable economic growth and development.
 International economics: the study of the role of countries with regard to
international trade and finances. Globalisation is a vital factor in this branch.
 Labour economics: the study of the dynamics of a country's labour force.
Incl. topics such as the demand for labour and the supply of labour.
 Regional economics: the study of the contribution of various geographic
regions to consumption, production and exchange.
 Resources economics: the study of natural and human-made resources of a
country.

7. Approaches to Economics
Economists investigage, in their investigations they often follow
either a microeconomic or a macroeconomic approach.
 Microeconomics - simplifies things by using the assumption
“other things being equal”. However, this approach does not
always give acceptable results.
 Macroeconomics - simplifies things by aggregating and
combining variables into a few broad groups. It is useful
because it tells us something about overall performance.

8. The Methods of Economics: Economic statements
The basic role of economists is to explain explain or predict
the likely outcome of economic events.
Economists are often asked to explain some economic
events. For example:
“What can government do to reduce unemployment?”
“What should government do to reduce unemployment?”
The first question invites a positive answer, where the
response will include facts about how the the economy
actually works.
The second question invites a normative answer, so the
response will give views (opinions) of what the government
ought to do.

9. Positive andnormativestatements

10. Modelsof Economics
Economic activities are complex, and because of this, economists identify those
things that are important and study them in isolation.
For example:
- the effect of price increases on quantities demanded
- the effect of increases of income on consumer spending
- the effect of tax increases on the disposable income of households
Very simple quanntitative models relating to the above example are as follows:
• Quantities demanded (D) are a function of prices (Pr) or D = f (Pr)
• Consumer spending (C) is a function of income (Y) or C = f (Y)
• Disposable income (Yt) is a function of the taxation level (T) or Yt = f (T)

11. Resources
What are resources in economics?
Resources in economics refer to natural, human and man-made
wealth that can provide satisfaction through the production of goods
and services.
Categories of Resources:
•Natural: forms of wealth derived from nature (i.e. land).
•Human: the most basic form of wealth (i.e brain power).
•Physical: man-made things used in the production of goods and
services.

12. SUMMARY
• Economics is the study of how society manages its
scarce resources.
• We study economics because of the basic economic
problem of scarcity.
• Apart from production, consumption and exchange,
other groupings of activities are known as the branches
of economics.
• Microeconomics and macroeconomics are the two
approaches to economics.
• Normative and positive statements form part of the
methods of economics.
• Resources are classified as natural, human and physical.

13. REFERENCES
Anthony, M. (2010). Introduction to Economics. Available from SlideShare at
http://www.slideshare.net/mavalino/macroeconomics-introduction-to-
economics?from_m_app=android
(Accessed 18 August 2020)
Valdehueza, G. D. (2009). Available from SlideShare at
http://www.slideshare.net/gar_dev/what-is-economics-1224528?from_m_app=android
(Accessed 18 August 2020)
Kikon, R. K. (2020). Introduction to Economics. Available from SlideShare at
http://www.slideshare.net/DrRolandKKikon/introduction-to-economics-
237938545?from_m_app=android
(Accessed 18 August 2020)
Case, K. E. (2013). Principles of Economics. Available at SlideShare at
http://www.slideshare.net/YoweLaEstanisLao/principles-of-economics-chapter-1-
28554676?from_m_app=android
(Accessed 18 August 2020)
Vijay, A. (2015). Introduction to Economics. Available from SlideShare at
http://www.slideshare.net/vijay94273/unit-1-47512177?from_m_app=android
(Accessed 18 August 2020)