DEFINITION OF 'ECONOMICS'

A social science that studies how individuals, governments, firms and nations make choices on allocating scarce
resources to satisfy their unlimited wants. Economics can generally be broken down into: macroeconomics,
which concentrates on the behavior of the aggregate economy; and microeconomics, which focuses on
individual consumers.
Economics is often referred to as "the dismal science."

There are two divisions or branches of economics; these are called as Macroeconomics and Microeconomics.
Macroeconomics is the economics the deals with the behavior of the whole or entire economy. This branch of
economics is concerned about the level of production, the rate of unemployment as well as in the gross national
product and others.
Microeconomics is the economics that deals with the behavior of a specific segment such as the consumers,
different business firms, the prices of products in the market and others. It is concerned with the individual unit
and not as a whole.
Economics is divided into certain divisions; these are the Production, the Consumption, the Distribution, the
Exchange, and the Public Finance.
Production in terms of economics means as the manufacturing process of goods to provide and satisfy the
different needs of consumers. utilization of products, goods and services by the consumers in a given amount of
time.
Distribution means the way the goods products and services are delivered to the consumers, as well as the way
the products, goods and services are allocated to the consumers through the different economic outlets.
Exchange means the way the products, goods or services are transferred to one person to another.
The Public Finance means the way the government implement financial activities such as on taxation, on
expenditures and other else.
There are certain factors that involved in the production in economics; these are the Land, the Labor, the
Capital, the Entrepreneur, and the Foreign Exchange.
The Land is one of the important factors in production. Land refers to the natural resources that are going to be
utilized in order to produce products or goods.
Labor means the people or the workforce or the manpower that will do specific activities in order to produce
goods or services. They are the employee or the workers of a certain company.
Capital means the physical productive capacity such as machines, tools, factories, money and other attributes
that are needed to produced products or goods.
Entrepreneur means an individual who organizes some other factors and brings all these factors together in
order to produce products or goods. This activity may also be performed by groups of individual as in the form
of cooperative of corporation.
Foreign Exchange means the foreign money or currencies that are reserved in order to import material or raw
materials that are needed in the production processes.

Economic history is the study of economies or economic phenomena in the past. Analysis in
economic history is undertaken using a combination ofhistorical methods, statistical methods,
and by applying economic theory to historical situations and institutions. The topic
includes business history, financial history and overlaps with areas of social history such
as demographic history and labor history. Quantitative (econometric) economic history is also
referred to as Cliometrics

The Basic Problem - Scarcity

Scarcity is one of the most basic economic problems we face. We run into scarcity because we
are a society with unlimited wants, but limited resources. Therefore, we have to choose. We
have to make trade-offs. We have to efficiently allocate resources. We have to do those things
because resources are limited and cannot meet our own unlimited demands.
Without scarcity, the science of economics would not exist. Economics is the study of
production, distribution, and consumption of goods and services. If society did not have to
make choices about what to produce, distribute, and consume, the study of those actions would
be relatively boring. Society would produce, distribute, and consume an infinite amount of
everything to satisfy the unlimited wants and needs of humans. Everyone would get everything
they wanted and it would all be free. But we all know that is not the case. The decisions and
trade-offs society makes due to scarcity is what economists study. Why are certain decisions
made and what is the next best alternative that they had to forego?
Scarce Goods And Services
As noted above, if scarcity did not exist, all goods and services would be free. A good is
considered scarce if it has a non-zero cost to consume. In other words, it costs something.
Almost every good we as individuals or as society consume costs something and is scarce. By
consuming one good, another good is foregone. Therefore, scarcity forces decisions and tradeoffs to be made.
Why are some scarce goods more expensive than other scarce goods? The cost of a good is a
signal of its scarcity. One good may be more scare than another, either because of limited
resources or higher want (demand) for that good.
Lets take two scarce goods - shark meat and chicken. Both have a non-zero cost/price, but we
would all agree shark meat is much more expensive to buy than chicken. Why is that? The
resources to produce shark meat are largely limited by the labor and capital it takes to catch a
shark, while the labor and capital required to produce chicken is less limiting. Even though the
resources to produce both are limited, there is much more labor and capital available to produce
chicken than shark. Not to mention the quantity of sharks is also much more limited than that of
chickens.
If the unlimited wants and needs of a particular good can be met by resources, then it's not
considered scarce. This would require the resources to be unlimited as well for it to meet
unlimited demand. What would be an example of a non-scarce good? Think about what you do
every day. Can you think of something you consume or use that is free? Something that you
have infinite access to and you would never expect to run out? Air. Air is a good that everyone
has unlimited access to, and no one has to pay to consume it!