What is Economics — Flashcards

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Economics is the study of how people and society use limited resources to satisfy wants. It helps explain how choices are made about buying, selling, producing, spending, and saving.

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Economics is vast because it deals with many everyday matters such as goods, market, demand, supply, price, inflation, banking, tax, lending, borrowing, and interest. It also studies decisions made by…

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Classical thinkers viewed economics as the science of wealth. They studied the nature and causes of wealth and how wealth is created by individuals and nations.

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The wealth definition did not focus on people who had no wealth. It divided society into rich and poor and ignored welfare concerns, so a wider view of economics was needed.

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Economics as the science of welfare means studying how the welfare of society is improved. It mainly considers the quantitative side of welfare, which can be measured in money, such as consumption of …

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Quantitative welfare includes things that can be measured in money, such as consumption of goods and services and per capita income. Qualitative welfare includes peace, leisure, and knowledge. Economi…

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Economics as the science of scarcity and choice studies how people make decisions when resources are limited and can be used in different ways. The word ends means wants, and scarce means limited reso…

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When resources are limited, they cannot satisfy all wants fully. So a choice has to be made about how to use them. For example, if more resources are used for wheat, fewer may remain for cloth.