Question

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Economics is a social science. It deals with people’s behavior. As sociology, psychology and politics, economics is the study of human action. It shows individuals acting and doing some particular things or undertaking specific activities.

                                        Economics studies how people and societies allocate scarce resources to produce goods and services, to distribute these goods and services, and to consume them in order to satisfy unlimited wants. So, in economics, we are concerned about three things which are: production, distribution, and consumption. Technically, these are the main activities we undertake every day.

                                     We said that economics deals with scarce resources. As we know, when something is scarce, its supply exists, but in limited quantity. In economics, we deal with everything whose supply is limited or scarce. That’s why economics is concerned about scarcity. As a matter of fact, we could define economics by only one word: scarcity.

                                      We need to remember that we use the scarce resources to produce goods and services in order to satisfy unlimited wants. So, the resources available for good production are scarce, but the wants are unlimited. Because we cannot satisfy unlimited wants with limited resources, then we are forced to make a choice. That’s why some people consider economics as the study of choices.

                                  Therefore, the two fundamental concepts that underlie the subject of economics are scarcity and choice.

                                   In economics we deal with scarce resources which are land, labor, capital, entrepreneurship. Land refers to natural resources. Everything we get directly from nature is part of land, such as timber, soil, water, oil, etc. Labor refers to the physical and mental abilities that people put to work in order to produce goods and services. Physical capitals are man made goods used to produce other goods. Examples are machinery, tools equipment. Human capital is the knowledge, experience, skill that we have acquire during a lifetime. We can apply them in the production process. Entrepreneurship is the ability that some people have to take risk. An entrepreneur has a vision and he will do what is necessary to accomplish it. By doing so, they will contribute in the creation of new products, new processes and ways of doing things, new jobs.

                                                 I

Complete the following sentences:

In Economics, we are concerned about three activities. They are:---------------------------------------------------------------------------------------------------------------------

Economics is the study of --------------------------and----------------------------

The resources we refer to in economics are:-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Economics is classified as a -------------------------------------------------, and as such it deals with---------------------------------------------------------like -------------------------------------------------------------------------------------------------------

People are forced to make choices because they face the problem of----------------------

If resources were ------------------------------------------the same as our wants, we would not have to ---------------------------------------------

Natural resources can be renewable or non renewable. An example of renewable resource is----------------------------------; an example of non renewable resource is-----------------------------------------------

Labor can be either ---------------------------------or -------------------------------------------

Capital can be either------------------------------------or----------------------------------------

What differentiates an entrepreneur from a non entrepreneur is that the entrepreneur is the person who accepts to take---------------------------------while the non entrepreneur does not.

Classify as land, labor capital or entrepreneurship:

      Forest, textbook, a labor leader, a computer program, fish in the ocean, creative ability to combine resources to produce new goods

                                                 

                                                II

Choose the best answer to the following multiple choice questions

1) Scarcity exists

a) When people consume beyond their needs

b) Only in rich nations

c) In all countries of the world

d) Only in poor nations

2) Which of the following would eliminate scarcity as an economic problem?

Moderation of people’s competitive instincts

Discovery of sufficiently large new energy reserves

Resumption of steady productivity growth

None of the above because scarcity can cannot be eliminated

3) Which of the following is not a resource?

Land

Labor

Money

Capital

4) Economics is the study of

How people make money

How to operate a business

How people make choices because of the problem of scarcity

The government decision making

5) Entrepreneurs can delegate every one of the following tasks to labor except:

Hiring and training employees

Assuming business risk and uncertainty

Supervision of the production process

Marketing the goods and services produced

  

Answer 1