Topics

1.1 What is economics?

Economics = social science, because:

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It deals with human society and behavior(how societies organize their activities,how they behave to meet their needs and wants)

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Its approach to studying human society is based on the scientific method.

Due to the complexities within societies, economists build models so as to better understand certain interactions

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A model is a simplified version of reality

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All models make a range of assumptions. These are often generalized on behaviors, choices and outcomes

The basic economic problem is that resources are scarce

In economics, these resources are called the factors of production

There are finite resources available in relation to the infinite wants and needs that humans have

Needs are essential to human life e.g. shelter, food, clothing

1. Introduction to Economics