What is Economics?

Read the following from

“The Worldly Philosophers” about the
basic economic problems faced by all
societies
What is Economics?
 What is Economics?

Reading Discussion Questions

1. How is the struggle against scarcity a struggle for survival of man?

2. Is man by nature a social creature? How does man's nature pose a challenge to his survival? Discuss...

3. Discuss the benefits and dangers of the two ways societies organized economic activities throughout most of human
history
a. Tradition
b. command

4. Why was there no need for "economists" throughout most of human history?

5. "It was not at all obvious that with each man out only for his own gain, society could in fact endure. It was by no means
clear that all jobs of society - the dirty ones as well as the plush ones - would be done if custom and command no longer
ran the world. When society no longer obeyed one man's dictates, who was to say where it would end?“ Evaluate the
author's claim that the economic revolution was "fundamentally more disturbing by far than the French, the American,
or even the Russian Revolution."
• Explain that the three basic economic questions that must be
answered by any economic system are: ‘What to produce?’, ‘How to
produce?’ and ‘For whom to produce?’

• 􏰀Explain that economics studies the ways in which resources are

allocated to meet needs and wants.
 The Factors of Production
The production of all of the good we desire requires scarce resources. It is the allocation of
these resources between humans’ competing wants that Economics focuses on.
Land
Land resources are those
things that are "gifts of
nature". The soil in which we
grow food, wood, minerals
such as copper and tin and
resources such as oil, goal,
gas and uranium are scarce
Labor
Labor refers to the human
resources used in the
production of goods and
services. Labor is the human
work, both physical and
intellectual, that contributes
to the production of goods
and services
Capital Entrepreneurship
Capital refers to the tools and
This refers to the innovation
technologies that are used to
and creativity applied in the
produce the goods and
services we desire. Since production of goods and
services. The physical scarcity
more and better tools
of land, labor and capital
enhance the production of all does not apply to human
types of goods and services,
ingenuity, which itself is a
from cars to computers to
education to haircuts, yet the resource that goes into the
production of out economic
amount of capital in the
world is limited, capital is a output. 
scarce resource.