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What is Economics?

- Economics is the science which

studies human behaviour as a
relationship between ends (wants and
needs) and scarce means (resources)
which have alternative uses.
Lionel Robbins 1930s
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What is Economics?
- Economics studies human
behaviour and is therefore a
social science like
geography, history,
anthropology and sociology
as opposed to a physical
science such as chemistry.
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What is Economics?
- Science means the pursuit of
systematic and formulated knowledge.
The key to the scientific approach is
the formulation and testing of a
hypothesis.

What is Economics?

- Physical science has a big

advantage over social science as a
social science deals with human
beings who are much less
predictable.
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The Economic
Problem

- The economic problem exists

because societies have limited
resources with which to satisfy
unlimited wants and needs.
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The Economic
Problem
- The economic problem applies to
individuals, groups, communities and
countries.
It is an ongoing problem which will
never be solved because the amount of
resources which can be used for
production of goods and services will
never be enough to satisfy all wants.
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The Economic
Problem

- Economists often use the term

relative scarcity to describe the
problem of too many wants and
needs and insufficient resources
to satisfy those ends.
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The Economic Problem

- A good is said to
be relatively scarce,
when it is scarce in
relation to demand
for it.
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The Economic
Problem
- Goods that are scarce relative to
wants may be termed economic goods.
(The term goods covers both
commodities and services.)
Examples of economic goods include:
diamonds, a top twenty band, oxygen
on the moon.
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The Economic
Problem

- In contrast to economic goods there

are free goods, like the air we breathe
or the rain that falls. No payment is
made for such goods.
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The Economic
Problem

- A small list of free goods exists.

Ice is free in the North Pole and it
would be futile for a
businessperson to set up a shop
selling ice to the Eskimos.
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Wants

- Economics is the science which

studies human behaviour as a
relationship between ends (wants and
needs) and scarce means (resources)
which have alternative uses.
Lionel Robbins 1930s
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Wants

- The ends that Robbins

mentioned are our wants.
Collectively, human wants are
usually considered to be unlimited
or insatiable.
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