1. What is Economics?

Economics is the study of scarcity and its implications for resource usage, the
production of goods and services, the growth of production and welfare through time,
and a wide range of other complicated topics of crucial importance to society. Politics,
geography, mathematics, sociology, psychology, engineering, law, medicine, and
business are all affected by economics. The basic purpose of economics is to find the
most rational and effective way to use resources to achieve private and social goals.

2. What are the 2 branches of economics, and how do they differ from each
other.

Microeconomics and macroeconomics are the two branches of economics that

examine activity in specific sections of the economy over a period of time.
Microeconomics is more precise and on a smaller scale, examining consumer
behavior, the supply and demand equation in individual markets, and the hiring and
wage-setting processes of individual businesses.
Macroeconomics covers a broader scope, such as the impact of fiscal policy, the
underlying causes of unemployment or inflation, and how government activities affect
overall economic growth.

3. What are the 5 major division of economics? Define each.

Consumption:
In economics, consumption is the use of products and services by households.
Consumption is distinct from consumption expenditure, which is the purchase of goods
and services for use by households.

Distribution:
Distribution studies the allocation of national income among various inputs, or
components of production. Distribution can also refer to the distribution of income
among individuals and families.

Exchange:
It is the buying and selling of products and services through exchange or the medium of
money. In most economies, exchange takes place in a market, which serves as a conduit
for consumers and producers.

Production:
Production involves combining inputs or factors, such as land, labor and capital, to
produce goods and services. Economists employ a production function to investigate the
relation between inputs and the goods and services produced.

Public Finance:
Governments play an active role in the economy. Public finance is the branch of
economics that investigates government taxation and spending, as well as the economic
impacts.

4. What are the tools of economics?

Social cost-benefit analysis

• It is a systematic and cohesive economic tool(method) to survey all the impacts caused
by an urban development project. It comprises not just the financial effects (investment
costs, direct benefits like tax and fees, et cetera), but all the social effects.

Input-output analysis
• It is a quantitative economic tool that captures these interindustry transactions. It
contains large tables of data that describe the interindustry transactions in defined
areas. These tables help the users to track the flow of money from one industry to the
next.

Economic Impact Study

• It is an economic tool/method traces the total economic activity generated by a policy,
investment, project, venue or activity in a pre-defined impact area. This impact area is
determined by the nature of the explored case study and can enhance an individual city,
region or an entire country.

Business Case
• Business cases capture the reasoning for initiating a project by estimating the revenues
and costs for the public authorities (which are partly covered by private
parties/investors) and by identifying changes in demands for government utilities and
services resulting from the project development. It is one of the most frequently used
economic tools by economists to facilitate the preparation of a robust and feasible urban
plan.

other tools-

Demand analysis
• It estimates or predicts the amount of a specific good (or service) that consumers are
willing and able to purchase. For this, economists use sales estimations, forecasting or a
demand model.

Financial Analysis
• It assesses the viability of a business/activity, and aims to answer the question if it is
possible to make profit from this activity? This kind of analysis is also referred to as a
financial statement or accounting analysis.

Fiscal impact analysis

• It identifies changes in demands for government utilities and services resulting from
some action and estimates the revenues and costs to local governments to provide these
services.

Feasibility study
• It is the private sector analogue of the social cost-benefit analysis. The economic
aspects of a feasibility typically involve a financial analysis to determine financial
feasibility and a market demand analysis to determine market feasibility.

5. What are the 5 economic resources? Define each.

Land: This refers to all natural resources, such as minerals, forests, water, and fertile
land that can be used to produce goods and services.

Labor: This is the human effort that goes into the production of goods and services. It
includes physical and mental exertion, as well as the skills and knowledge of workers.

Capital: This refers to the physical and financial assets that are used to produce goods
and services, such as machines, buildings, and investment funds.

Entrepreneurship: This is the drive and initiative of individuals to identify

opportunities and create new businesses. It includes the ability to manage resources,
take risks, and make decisions.

Technology: This refers to the tools, methods, and processes used to produce goods
and services, such as computers, robots, and advanced manufacturing techniques.
Technology is important because it increases efficiency, productivity, and
competitiveness.