Introduction to Economic Thought – What Is Economics About?

A set of Q&A flashcards covering key points from the lecture on the definition of economics, economic agents, factors of production, scarcity, fundamental economic questions, and the scientific method used in economic analysis.

What is the primary focus of economics?

The study of how society manages its scarce resources.

Who are the three main economic agents examined by economists?

Consumers (households), producers (businesses), and the government.

List the four fundamental factors of production.

Land, labour, capital, and entrepreneurship.

In economic terms, what does the factor "land" encompass?

All natural resources used to produce goods and services.

How is the factor of production "labour" typically measured and rewarded?

Measured in man-hours and rewarded by the wage rate.

Name the three distinct forms of capital highlighted in the lecture.

Physical capital (goods and machinery), human capital (education, training, skills), and social capital (networks and relationships).

What role does entrepreneurship play among the factors of production?

It combines land, labour, and capital to create and market new goods and services, bearing the associated risks.

Why must societies make choices about resource use?

Because resources are limited while human wants are unlimited, creating scarcity.

State the three basic economic questions every society must answer.

1) What to produce? 2) How to produce? 3) For whom to produce?

Which category of capital includes education, training, and skills?

Human capital.

Outline the basic scientific process applied in economics.

Observe and ask a question → state a hypothesis → collect data to test the hypothesis → analyse data and form a conclusion.