Basics Concept of

Economics
PREPARE and PRESENTED
BY;
Komal shahzadi
Introduction
 Microeconomics = The study of how individuals make
decisions and how these decisions interact.
 Macroeconomics = The study of the overall economy and
its’ ups and downs.
Natural Resources

 Natural Resources A Gift of Nature

 Humans learned how to extract resources from

the land and transform them from their original
state
Sand = Glass
Sun = Energy
A Consumer Society!

 The world’s people have consumed as many

goods and services since 1950 as all previous
generations put together

 If everyone on our planet consumed resources

at the rate of U.S. citizens, we would need 3
more planet earth’s to provide for all 6 billion
people.
Economics is the Study of
Choices
 Productive Resources:
Anything that people
can use to make or
obtain what they want.

 In economics we study how

we use scarce resources

 Choices can be painful

Land
Labor
(The available time of workers)
Capital
($, machinery, buildings, and other man-made productive assets)
Human Capital
(The educational achievements and skill of workers)
How Do We Satisfy Our
Wants?
 Suppose we had an
infinite supply of
resources. Would a
problem exist?

 YES!

 The basic problem in

economics is not a
lack of resources, but
our limitless wants.
Scarcity

Unlimited
Wants vs.
Limited
Resources
Core Economic Principle
#1
People Choose
 We always want more than we can get and
productive resources (human, natural, capital)
are always limited. Therefore, because of this
major economic problem of scarcity, we usually
choose the alternative that provides the most
benefits with the least cost.
Wants vs. Needs

 Needs = Survival needs, food, shelter,

clothing, etc.

 Wants = Anything else

We’re perpetually in a state
of hunger.
 We always want more stuff.

 As a result, scarcity governs us.

 Scarcity forces us to make choices and prioritize

needs and wants.
Core Economic Principle #
2
All Choices Involve Costs
The opportunity cost is the
next best alternative you
give up when you make a
choice. When we choose
one thing, we refuse
something else at the
same time.