Senior Economist with 14 years of diverse experience of industry and academia

Dr Ghulam Mohey-ud-din, PhD

  • Gold Medalist

    Islamia University Bahawlapur
  • Research Publication

    Book and Articles
  • PhD Economics

    GC University Lahore
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Free Introduction to Economics 101: A Lucid Concept for Students

Basic Concept and Introduction to Economics

Whenever a baby born in this world, he/she needs so many things to survive in this world such as sunlight, water, air (oxygen), milk, food, clothing and shelter (housing) etc. some of these requirements are met freely (free of cost) like sunlight and oxygen etc. because these are available in abundance. These types of wants are ‘Non-economic Wants‘ in Economics. But, to meet some other requirements ( like milk, food, items of clothing and shelter (housing) etc.), one has to pay something in exchange.

Introduction to Economics
Introduction to Economics

One has to pay the price for these scarce resources in terms of dollars (currency), other goods & resources (for barter or exchange) or may has to render some service in exchange. Thus these types of requirements or wants are called ‘Economic Wants‘ in Economics. Therefore, the Economics studies that how the people meet their Economic Wants through managing these Scarce Resources.

Definition of Economics

As discussed earlier that Resources are scarce and a man has to pay something for meeting his/her needs to get these Scarce Resources. So, Economics studies how a person manages the scarce resources to get maximum utility (satisfaction). Economics is Social Science Which Studies Human Economic Behavior. By human Economic Behavior, we mean the behaviour of human beings which they adopt to fulfil their economics wants.

Resources in this world are scarce, so people have to make the rationale decisions (choices) to manage and utilize these scarce resources. So, Economics often termed as the science of Scarcity and Choice. One thing should also be made clear that the scarce resources have multiple (alternate) uses, and man has to decide (make a choice) about the optimal use of these resources. In the context of ‘Scarcity and Choice‘ Robins defines the term Economics as below,

“Economics is a Social Science which studies human behaviour as a relationship between multiple ends and scarce resources which have alternate uses.”

In this definition, three terms are used: (i) Multiple Ends, i.e. wants are unlimited, (ii) Scarce Resources, i.e. resources are scarce and (iii) Multiple Uses, i.e. the resources have multiple uses.

Consequently, we can say that Economics studies human behaviour that how he meets his/her unlimited wants and desires through managing his/her scarce resources and by making the optimal choice about the best use of the resources among their alternate uses. There the concept of preference is developed that to manage multiple wants from limited (scarce) resources, he/she has to preferential about the choices. He/she may prefer his/her one want or desire over other then first he/she may fulfil his/her more preferred choice first because of the scarcity of resources.

Introduction to Economics – A video Lecture

Economics is a Science of Wealth

Another definition of Economics for introduction of economics which is most commonly used is derived from the concept of Adam Smith(the Founder of Modern Economics) is,

“Economics is a science of wealth which studies how the wealth is produced, how it is consumed, for whom it is produced and how it is distributed.”

According to this definition, Economics studies,

  1. Production of Wealth
  2. Consumption of Wealth
  3. Distribution of Wealth

Factors of Production in Economics

Here the concept of the ‘factors of production’ arises. There are four factors of productions, i.e. (i) Land (ii) Labor (iii) Capital & (iv) Entrepreneur (Managers). So, wealth is created (produced) using these four factors of productions and then distributed among these accordingly. The shares of the above mentioned four factors are (i) Rent (ii) Wage (iii) Interest & (iv) Profit respectively. Nowadays, Technology is also considered as a factor of production.

© 2012 Dr Ghulam Mohey-ud-din. 
Written on: September 8, 2012 (previously published on Hubpages)

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