SECTION 1: The Nature of Economics

Economics as a social science

Economics is a social science that focuses on the production, distribution, and

consumption of goods and services, and analyses the choices that individuals,
businesses, governments, and nations make to allocate resources.

Branches of Economics
● Microeconomics: Microeconomics is the study of individuals, households
and firms' behaviour in decision making and allocation of resources.
● Macroeconomics: Macroeconomics is a branch of economics that studies
how an overall economy—the markets, businesses, consumers, and
governments—behave in an economy.

Economy meaning
An economy is a system of organisations and institutions that either facilitate or
play a role in the production and distribution of goods and services in a society.
Economies determine how resources are distributed among members of a
society; they determine the value of goods or services; and they even determine
what sorts of things can be traded or bartered for those services and goods.

Main agents in an economy

An economic agent is an entity that engages in economic activity. This activity
can be buying, selling, or producing goods and services and influencing capital
markets.

Household and Individuals-Households and individuals are the most basic

economic agents. They are defined as a group of people living under the same
roof who share common resources. The household or individual agent is
responsible for consumption, meaning they purchase goods and services to
satisfy their needs and wants. Households and individuals impact the economy
by influencing both demand and supply. Their demand for goods and services
affects prices, and their labour supply affects production.

Firms- Firms or "businesses," are another type of economic agent. They are
defined as an organisation that produces goods and services to sell them to make
a profit. The business agent is responsible for production. This responsibility for
the profit means they combine labour, capital, land, and entrepreneurism to
create goods and services. Businesses impact the economy by influencing both
demand and supply. Their demand for inputs affects prices, and their supply of
goods and services affects production.

Government: They are responsible for providing public goods and services and
regulating businesses. They are responsible for stabilization which means they
use fiscal and monetary policy to maintain economic stability. Governments
impact the economy by influencing both demand and supply. Their demand for
taxes and regulations affects prices and their supply of public goods and
services affects production.