Economics: the study of ways in which a society decides to use its scare resources to satisfy unlimited wants (at the individual, national, and international level).

• 1. Scarcity: insufficiency relative to wants. A universal problem because the resources available for the satisfaction of human wants are limited while wants are unlimited
• 2. Relative scarcity: we do not have enough resources to satisfy all our wants and needs.
• 3. Needs: things that essential for life in our society
• 4. Wants: things we desire because they give us satisfaction

All societies must decide how to use their limited resources to satisfy people’s wants, and throughout history this has led to the development of a variety of economic systems.

What should we produce?

How do we produce it?

How much should we produce?

Who gets what we produce?

Why is economics a social science?

• Economies uses systematic and logical models (scientific) controlled by evidence
• Economics studies human actions and tries to explain the reasons and motives of humans as the cause of things and changes

What is positive and normative economics:

• Normative economics:
• Forming views, ideas, and beliefs on economic choices or decisions (policies) and make recommendations about these policies
• Not supported by facts and evidence but it is accepted because of the value of its statements that contains judgement of what should happen
• Positive economics
• Economic analysis that explains what happens in the economy by using economic models is supported by facts and evidence

1. Microeconomics: branch of economies that focuses on the factors affecting the decisions made by individuals, firms, and governments about the allocation of resources and the price of goods/services
2. Macroeconomics: branch of economics that focuses on the performance, structure, behaviour, and decision-making of an economy (economic aggregate)
3. International economics: branch of economies that focuses on international trade (imports/exports), transactions and the advantages/disadvantages of trade policies

Economics: the study of how societies are organised in using the scarce resources available to satisfy their unlimited ends (needs and wants)

The three major branches of economics are microeconomics, macroeconomics, and international economics
• Microeconomics: the study of consumer behaviour. consumers are individual economic decision makers (households and firms)
• Macroeconomics: the study of broader economic aggregate (total) demand and supply in the economy
• International economics: the study of international trade between countries

Econometrics can be seen as a branch of economics that is widely used within the three major branches of economics

Normative economic statements are statements of values used I economies as recommendation. They are not supported by facts and evidence, but they are valued judgements

Positive economic statements are statements supported by facts and evidence

The problem of scarcity causes societies, organisations, and countries to make choices For societies to make good choices they must try to answer these important questions:

What should we produce?

How much should we produce?

How should we produce it?

Who gets what we produce?

• Making choices also comes with decision making (opportunity cost)
• Economics uses the scientific approach in studying the behaviour of people in the society
• Economics is a social science because it tries to give a logical explanation to the behaviour of people in the society
• Economics views humans as the main agents and cause of things and changes