Bec Module 1: Introduction To Economic Theory: Economics
Bec Module 1: Introduction To Economic Theory: Economics
ECONOMICS
ECONOMIC ACTIVITY
Efforts to satisfy human wants with the use of goods and services
3 Elements:
1. Human wants
Categories
o Basic needs
o Higher needs
o Created wants
2. Use of resources
Are the inputs needed for the creation of good or services.
o Capital as a factor
Human Creations used to produce goods and
services.
Physical capital
Human capital
o Entrepreneurship as a factor
Talent required to dream up a new product or find
a better way to produce an existing one.
o Labor as a factor
Includes time
Broad category of human efforts-physical and
mental.
Labor is scare because the time that can be
allocated to various tasks is scarce or limited.
Payment use for Resources
Wage
Interest
Rent
Profit
o Land as a factor
Includes not only land in the conventional sense
but also other natural resources.
Gits of nature including bodies of water, trees, oil
reserves, etc.
Renewable or inexhaustible.
3. Technique of production
How resources are used in the production
May be:
o Capital-intensive
o Labor-intensive
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BEC MODULE 1: INTRODUCTION TO ECONOMIC THEORY
Consumptions
Markets
Economic Activity
Problems:
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BEC MODULE 1: INTRODUCTION TO ECONOMIC THEORY
Unemployment
Economic instability
Low level of growth and development
Inequalities in income distribution
Determination of the type of economic system
Economic Analysis
Economic Policy
STEPS:
1. Definition of POSTULATES.
2. FACTS observation
3. LOGIC application (deductive and inductive reasoning)
4. Testing of HYPOTHESIS.
Rational- people try to make the best choices they can, given the
available information.
Marginal Analysis
Marginal
o Incremental
o Additional
o Extra
Microeconomics
o Examines the factors that influence individual economic
choices.
o Examine how market coordinate the choices of various
decision-makers.
o Studies the individual pieces of the economic puzzle.
Macroeconomics
o Studies the performance of the economy as whole.
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BEC MODULE 1: INTRODUCTION TO ECONOMIC THEORY
Science
Scientific Method