Economics is the study of how limited resources are used to satisfy unlimited human wants. It examines scarcity and the choices that must be made as a result. There are four main productive resources - land, labor, capital, and entrepreneurship. Macroeconomics looks at aggregate economic measures like growth and inflation, while microeconomics analyzes individual markets and decision making. Positive economics makes factual statements that can be tested, while normative economics involves value judgments about how the economy should work. The three basic economic questions are what to produce, how to produce it, and who receives what is produced.

1. Introduction
What is economics
Economics is the study of how we choose to use limited resources to
obtain the maximum satisfaction of unlimited human wants.

2. Economics is the study of why Mark/I does/do not have a car.
Scarcity things must be LIMITEDand WANTED.

3. Economics is the study of why Mark/I does /do not have a BIGCAR.
"The social science concerned with how individuals, institutions, and society make optimal (best) decisions
under conditions of scarcity”.

4. The concepts of scarcity and choice are central to the discipline of
economics.
Because of scarcity
whenever the decision is made to follow one course of action, a simultaneous
decision is made to forgo some other course of action.
Thus, any action requires a sacrifice.
Because productive resources are scarce, the amounts of goods and services
produced from these ingredients must also be finite in supply.

5. What are these scarce productiveresources?
Productive resources, sometimes called factors of production or productive inputs,
are classified into four broad categories:
• Land (refers to all-natural resources. Included in this category are wildlife,
minerals, timber, water, air, oil and gas deposits, arable land, and mountain
scenery.)
• Labor (refers to the physical and intellectual abilities of people to produce
goods and services.)

6. Productiveresources/Factorsof production/Productiveinputs:(.Contd.)
• Capital(refers to manufactured commodities that are used to produce
goods and services for final consumption. Machinery, office buildings, equipment, warehouse
space, tools, roads, bridges, research and development, factories, and so forth are all a part of a
nation’s capital stock.) and
• Entrepreneurialability The entrepreneur does four things:
1. comes up with new ideas
2. brings all the other resources together
3. makes the basic decisions, and
4. takes the risks to earn profits (or losses).

7. MACROECONOMICS VERSUS MICROECONOMICS
Scarcity, and the manner in which individuals and society make choices, are fundamental to the study of economics. To examine these important
issues, the field of economics is divided into two broad subfields: macroeconomicsandmicroeconomics.
Definition: Macroeconomics is the study of aggregate economic behavior. Macroeconomists are concerned with such issues
as national income, employment, inflation, national output, economic growth, interest rates, and international trade.
Definition: Microeconomics is the study of individual economic behavior. Micro economists are concerned with output and
input markets, product pricing, input utilization, production costs, market structure, capital budgeting, profit maximization,
production technology, and so on.

8. Positive and Normative statement/economics
The differences between positive and normative statements are:
1. A positive statement is a statement of fact. It may be right or wrong, but its accuracy can be tested
by appealing to the facts.
Whereas, a normative statement is a statement of value: a statement about what ought or ought not
to be, about whether something is good or bad, desirable or undesirable.
2. Economists can only contribute to questions of policy in a positive way. That is, they can analyze
the consequences of certain policies. They can say which of two policies is more likely to achieve a
given aim, but they cannot as economists, say whether the aims of the policy are desirable.
3. ‘Unemployment is rising’, ‘inflation will be over 6 percent by next year’, if the govt. cuts taxes,
imports will rise’, these are all examples of positive statements.
It is right to tax the rich more than the poor, the govt. ought to reduce inflation-these are all
examples of normative statements.
4. Positive economics discuss about how the problems of economics be solve. On the other hand,
normative economics discuss about how the problems of economics should be solved.

9. THREE BASIC ECONOMIC QUESTIONS
•WHAT GOODS AND SERVICES SHOULD BE PRODUCED?
•HOW ARE GOODS AND SERVICES PRODUCED?
•FOR WHOM ARE GOODS AND SERVICES PRODUCED?