What is Economics

Economics

The social science that studies how individuals, governments, firms, and societies make choices about allocating scarce resources to satisfy unlimited wants.

Social Sciences

Is a field that studies human society and relationships.

Economics is a Social Science because:

• It studies human behavior and decision-making.

• It uses observation, data, theories, and models.

• It examines how people interact with resources, policies, and institutions.

Scientific Approaches in Economics

• Hypothesis (e.g., higher prices reduce demand)

• Data collection (e.g., surveys, market prices)

• Analysis (e.g., graphs, models)

• Prediction (e.g., price control effects)

Microeconomics

Studies individual behavior, markets, consumers and producers

Macroeconomics

Studies the national economy, government policy, inflation, GDP

Adam Smith

Father of Modern Economics, Laissez-faire, Wealth of Nations

David Ricardo

Law of Comparative Advantage, Diminishing Marginal returns

Karl Marx

Communism, class struggle, Das Kapital

Importance of Economics

• Personal Finance

• National Development

• Informed decision-making

• Global Understanding

IoE: Personal Finance

Helps in budgeting and managing resources.

IoE: National Development

Policies on employment, poverty, and prices.

IoE: Informed Decision-making

Understanding inflation, taxes, loans, and wages

IoE: Global Understanding

Trade, foreign exchange, and economic crises

Sociology

Studies social structures and behavior that affect economic decisions.

Choices, scarcity, value.

Political Science

Examines how government decisions influence the economy.

Power and Governance

Anthropology

Looks at cultural practices related to production, exchange, and consumption.

Culture and human evolution

Psychology

Explains individual decision-making and cognitive biases.

Individual behavior

Geography

Studies physical space and environment affecting economic activities.