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Economics Principles: Scarcity & Choices

This document provides an introduction to economic principles and key concepts. It discusses how scarcity arises from unlimited human wants and needs existing in a world with finite resources. It defines economics as the study of how societies make choices about utilizing scarce resources. It also distinguishes between wealth as a stock of goods owned, and income as a flow of money received over time, and outlines some main points about scarcity, opportunity costs, production, consumption, and exchange.

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Waqas Mazhar
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7 views19 pages

Economics Principles: Scarcity & Choices

This document provides an introduction to economic principles and key concepts. It discusses how scarcity arises from unlimited human wants and needs existing in a world with finite resources. It defines economics as the study of how societies make choices about utilizing scarce resources. It also distinguishes between wealth as a stock of goods owned, and income as a flow of money received over time, and outlines some main points about scarcity, opportunity costs, production, consumption, and exchange.

Uploaded by

Waqas Mazhar
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

PRINCIPLES OF ECONOMICS

Chapter One: An introduction to


economics
Instructors:
 Waqas Mazhar
 [Link]@[Link]

 Ghullam Abbas
 [Link]@[Link]
Economic Problem

Resources

Human
Needs
and wants
Economic Problem
 Scarcity: Scarcity is the problem of infinite human
needs and wants, in a world of finite resources
 Unlimited wants
 Economic goods are scarce goods.
 Free goods: unlimited in supply
Choice and oppertunity cost

Scarcity

Choice
Choice and oppertunity cost
 When we make choice, something have
to be given up or forgone.
 What we sacrifice is basically oppertunity
cost
 But if we have many choice then we say
next most desired alternative is
oppertunity cost.

Economics – What is it about?

 Who will work?


 What goods and
how many of
them should be
produced?
 What resources
should be used
in production?
 At what price
should the
goods be sold?
Economics: definition

 Economics is the study


of choices that we
make to utilize our
scarce resources .
Production, consumption and
exchange:

 Production:
 Any work which helps
to satisfy peoples’
wants and for which
there is price for it.
Production, consumption and
exchange:
 Consumption: using up
 Durable goods: long life
 Nondurable goods: used up imediatly
 Services: intangible

 Exchange:

Wealth and Income

 Wealth: stock of goods


having any value
 Private wealth:
possessions of individual
 Social wealth: owned by
community
 National wealth:
possessions by citizens
of a country
Wealth and Income

 Income: flow of
money, earned or
received
 likewages, salaries,
interst, rent,
profits from any
business or shares

Difference between income and
wealth
 Income is flow of money received during
a period of time
 Wealth is stock of goods owned at some
moment in time
Main points
 Human wants appear to be unlimited.
 Scarce resources to satisfy human
unlimited wants.
 Opportunity cost means a choice is made,
something has to be given up.
Main points
 Free goods don’t have opportunity cost
 Production includes output of goods and
services
 To survive we engage in exchange

 End of chapter

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