Study sheet: Introduction to Economics

📋 Course Outline

1. Economic and Economical
2. Economy and Economics
3. Scarcity and Economic Choice
4. The Cost-Benefit Principle
5. Microeconomics and Macroeconomics

📖 1. Economic and Economical

📝 Essential Points

📌 Economic is an adjective related to trade, industry, money, business, and the economy, whereas economical describes something that uses few resources or uses them carefully and efficiently.

💡 Memory Hook

Economic concerns the economy; economical concerns efficient resource use.

📖 2. Economy and Economics

🔑 Key Concepts & Definitions

• Economy : the system by which goods and services are produced, distributed, sold, and purchased in a local, regional, national, or global community
• Economics : the social science that studies the production, distribution, and consumption of goods and services under conditions of scarcity, as well as the factors affecting the economy

📝 Essential Points

• The word economy comes from the ancient Greek word “oikonomia,” meaning household management, and originally included responsibilities such as caring for children and cleaning the home.

💡 Memory Hook

Household management → family finances → national and global economic system.

📖 3. Scarcity and Economic Choice

🔑 Key Concepts & Definitions

• Scarcity Principle : The scarcity principle states that resources are limited or difficult to obtain while human wants are unlimited, so individuals, businesses, and governments must make choices and set priorities.

★ Must-know

• Scarcity leads people and institutions to choose how to produce and consume, make trade-offs, and seek the most efficient use of limited resources for society.

Further detail

• Examples of scarce resources include:
  • material resources
  • petrol
  • electricity
  • water
  • money
  • food
  • skilled workers

💡 Memory Hook

Unlimited wants versus limited resources forces choices and trade-offs.

📖 4. The Cost-Benefit Principle

🔑 Key Concepts & Definitions

• Cost-Benefit Principle : the idea that an individual, business, or government should take an action if and only if its benefits are at least as great as its costs

📝 Essential Points

📌 When benefits exceed costs, an action can satisfy individuals and contribute to economic growth; when benefits equal costs, the action is neither positive nor negative; and when costs exceed benefits, the action can produce regret and frustration.

💡 Memory Hook

Benefits greater than costs: gain; benefits equal costs: neutrality; costs greater than benefits: loss.

📖 5. Microeconomics and Macroeconomics

🔑 Key Concepts & Definitions

• Microeconomics : the study of economic decisions made by individual people and businesses and how those decisions influence specific markets and industries
• Macroeconomics : the study of the entire economy and large-scale decisions and outcomes, including interest rates, inflation, unemployment, gross domestic product, economic growth, and government monetary and fiscal measures

📝 Essential Points

• Inflation increases production costs and the prices charged by businesses, raises the cost of living, reduces individuals’ purchasing power, and can lead workers to request higher salaries.

💡 Memory Hook

Micro studies individual decisions and markets; macro studies the entire economy and large-scale outcomes.

📊 Synthesis Tables

Microeconomics and Macroeconomics

Dimension	Microeconomics	Macroeconomics
Focus	Individual people, businesses, markets, and industries	The entire economy and large-scale outcomes
Examples	Consumer behaviour and competition	Interest rates, inflation, unemployment, and GDP
Connection	Individual decisions can influence specific markets	Economy-wide decisions affect individuals and businesses