INTRODUCTION TO

ECONOMICS
SUBTOPICS

• Definition, scope and significance of economics.

• Economics concept and problem.

• Comparison between conventional and Islamic economics.

• Quranic and sunnatic perspective on economics.

OIKOS LATIN
HOUSE
GREEK FRENCH
GREEK
OIKONOMIA
HOUSEHOLD ÉCONOMIE
MANAGEMENT
Management
of material
NEMEMIN
MANAGE
ENGLISH ECONOMY resources.
In late 15th
centuries.

ETYMOLOGY OF ECONOMICS
DEFINITION

ECONOMY

• Economy is a social science concerned with

how individual, institution and society make
best choice under condition of scarcity.
ADAM SMITH
Economics as the science of wealth. He
explained how a nation’s wealth is created . He
considered that the individual in the society
wants to promote only his gain and in this, he is
led by ‘invisible hand’ to promote the interest
of the society through he has no real intention
to promote the society's interest
ALFRED MARSHALL
A study of mankind in the ordinary business of
life. It examines that part of individual and
social action which is mostly connected with
the attainment and with the use of the material
requisites of well being.
 SCOPE OF ECONOMICS
Micro economics
Microeconomics is the
study of individuals and
business decisions
Macro economics
Macroeconomics is the
branch of economics that
studies the behavior and
performance of an economy
as a whole. It focuses on the
aggregate changes in the
economy such as
unemployment, growth rate,
gross domestic product and
inflation
DIVISION OF
PRODUCTION PRICES INCOME EMPLOYMENT
ECONOMICS
MICROECONOMICS Production/output in Prices of individual Distribution of Employment by
individual industries goods & services. income and wealth. individual businesses
and businesses and industries.
Eg: Price medical Eg: Wages in the
Eg: How much to care @ Petrol @ auto industry @ Eg: Jobs in steel
procude steel@ food prices @ min. wage @ industry @ No. of
office space@ cars apartment rents poverty Accountant @ Doctors.
MACROECONOMICS National Aggregate price National Income. Employment and
Production/output. level. unemployment in the
Eg: Total wages and economy.
Eg: Gross Domestic Eg: Consumer price salaries @ Total
product (GDP) @ producer prices @ corporates profits Eg: Unemployment
rate of inflation rate.

Difference between Micro & Macro

Economics
SIGNIFICANCE OF ECONOMICS STUDY

• Optimizes resources Usage.

• Utilizes the opportunity cost.
• Gains social efficiency.
• Stabilizes the overall economy.
• Understand individual economics.
OPTIMIZES RESOURCE USAGE
• Resources keep on reducing
everyday.
• This condition will keep on
worsen.
• Unless we use our resource
efficiently and effective.
• Economics provide ways to:
• Optimize resource uses
• Reduce wastage.
UTILIZES THE
“OPPORTUNITY COST”
• Principle of
effectively utilize
scarce resources.
• Calculating & checking
the opportunity cost.
• Theory of exclusion.
• Min. opportunity cost,
Max profits.
GAINS SOCIAL EFFICIENCY
ECONOMICS
INEFFICIENCY
SPEND

UNEMPLOYMENT

If we understand POVERTY
economy,
• Well Planned economy.
• Profitable Economy.
STABILIZE THE OVERALL ECONOMY

• Economics stability & growth is

important to any country/society.
• Measured by certain economically
practices:
• GDP @ GNP from Economics Reports.
• Able to measure how strong their
economy.
• Give general idea about how they
could sustain their growth & prevent
monetary impact on their citizen.
UNDERSTANDS INDIVIDUAL ECONOMICS

• Person need to understand

economics situations & change in
his life.
• May not need complex
understanding of economics but,
need to understand how
economics practice:
• May helps him prevent bankruptcy.
• Help him effectively utilize
resources & max his profit.
ECONOMICS CONCEPT &
PROBLEM
SCARCITY
• Scarcity of resources, but
unlimited needs.
• Achieve our needs with
minimizing the amounts
of resources.
OPPORTUNITY COST
• Related to concept
of scarcity.
• Sacrifice the cost to
gain benefits.
• Because of scarcity
of resource
SCARCITY, OPPORTUNITY COST &
CHOICE
ECONOMICS
PROBLEMS

What to Who gets the

Produce? Product?
How to
Produce?