Economics-Topic 1; Introduction to Economics

Economics

The study of how individuals, businesses, and governments use limited resources to satisfy their unlimited wants.

Human wants

Things people desire to satisfy their needs and improve their standard of living, such as food, clothing, shelter, education, and mobile phones.

Resources

Things used to produce goods and services.

Basic economic problem

Scarcity; occurs because human wants are unlimited while resources are limited.

Three basic economic questions

What to produce? How to produce? For whom to produce?

Opportunity cost

The next best alternative forgone when a choice is made; for example, the food forgone when choosing to buy a book instead with GH₵20.

Factors of production

Components used in the production of goods and services: Land (natural resources), Labour (human effort), Capital (man-made resources), Entrepreneurship (organizing factors and taking business risks).

Goods

Physical items that satisfy human wants, such as books and clothes.

Services

Activities performed to satisfy wants, such as teaching and healthcare.

Scarcity

The basic economic problem that arises from limited resources in the face of infinite human wants, necessitating choices about resource allocation.