4.1.1 Economic Methodology and The Economic Problem, & 4.1.1.2 The nature and purpose of economic activity

September 4 and 5, 2024

Basic Economic Problem

The issue of scarcity and how to best produce and allocate these scarce resources.

Scarcity

an economic concept where individuals must allocate limited resources to satisfy their needs/wants

economic activity

the actions and processes involved in producing, buying, and selling products and services. Basically the process of production and consumption

resources are extracted, resources are manufactured in goods/services,  goods/services are distributed, goods/services consumed

steps of economic activity

what to produce, how to produce it, for whom to produce

3 main basic questions in economics

unlimited wants/needs, limited resources

what leads to scarcity, which leads to choices

factors of production

also known as economic resources, these are inputs used in the production of goods/services in an economy, and is essential for economic activities

land, labour, capital, enterprise

Economic resources/factors of production are categorised into 4 types

Capital goods

goods used in the production of consumer goods that are consumed themselves

Economics

the study of how people make choices while considering how these choices are constrained because of limited resources, like money, time, and information.