Basic Economic Concepts

• Economics is a social science that deals with individual behavior and relationships between people.
• Economic theories are softer than natural sciences and can survive more exceptions.
• Positive statements are based on facts and can be tested, while normative statements are based on opinions.
• The economic problem is about allocating finite resources among infinite wants.
• The four main factors of production are land, labor, capital, and enterprise.

This module  provides an introduction to economics and its basic concepts. Economics is a social science that studies how to allocate scarce resources among infinite wants. It distinguishes between positive statements, which can be tested against evidence, and normative statements, which are based on opinions. The economic problem arises from the finite resources and infinite wants, and it is solved by answering the three economic questions: what to produce, how to produce, and for whom to produce. The four main factors of production are land, labor, capital, and enterprise. Economics theories are softer than natural sciences because they are based on individual behavior and relationships between people.