Economics Study Pack

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This is the Economics study guide from 2010. It is a free study guide for revision.

Other years: Economics

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Chapter 1
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1.0 Introduction

A lot of statements have been said about economics as a subject. The following are some of the statements.
a. 'Economics is the painful elaboration of the obvious.'
b. 'Economics is everything we know in a language we don't understand'
c. A Swedish contribution: "Economics is like red whine - you shouldn't smell it but drink it, but if you drink too much on one occasion, there is a risk for dizziness"

This introductory chapter will define economics and discuss the central economic problem which is a problem of scarcity.
1.1 Defining economics

It is quite difficult to define economics as such. According to one standard definition, economics is concerned with the way in which resources are allocated among alternative uses to satisfy human wants. Economics therefore can be defined as a social science that studies how society allocates its scarce resources amongst competing alternatives.

From the above definition, economics is described as a 'social science'. 'Social' in that the subject matter is the human being. 'Science' because the approach used has much in common with that of the natural sciences because economics use scientific methodologies in its formulation of policies.
1.2 Microeconomics and macroeconomics

It is customary to divide economics into two parts: microeconomics, and macroeconomics. Microeconomics deals with the economic behaviour of individual

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