TOPIC 1 ► INTRODUCTION TO ECONOMICS

LEARNING OUTCOMES

By the end of this topic, you should be able to:
Explain the term “economy”;
Differentiate between microeconomics and macroeconomics;
Discuss the three basic economic problems;
Explain the concepts of scarcity, choice and opportunity cost using the production possibility curve; Elaborate how an economic system answers the three basic economic questions; and
Assess the process of circular flow of income in an economy without governmental intervention. 

INTRODUCTION

We always use the term “economy” in our daily lives. What does it actually mean? Economy covers a wide spectrum of areas in our social life. Every area – education, religion, housing, health, transportation, defence and others, has aspects that can be discussed through an economics point of view. In short, economy is a theory that affects the lives of individuals and society as a whole. In this topic, we will be discussing economics in terms of concept, definition and the importance of economics in decision-making of efficient resource utilisation.