Chapter 1

Economics
Economic definition: The study of the allocation of scarce resources among
people
Scarcity : material wants exceed the ability to satisfy them
a- Relative scarcity : resources is not enough to cover our need
b- Absolute scarcity : there is no resources
Methods to challenge scarcity
1- Employment of available resources
2- Development of resources and technology
3- Efficient organization
4- Redistribution of goods and income
Microeconomics: the study of how the choices of individual decision making
Macroeconomics: study of countries totals
Big economic question:
 What goods and service are produced?
 How to produce?
 Who get the product ?
Factors of production
1- Land : everything over or under the surface of land
2- Labor : human skills used in production
3- Capital : all assets use in production
4- Entrepreneurs
Functions of entrepreneur:
1- Decide what good to produce
2- Assembling resources
3- Gain profit or loss