Basic Concepts of Economics

Land includes only arable land and forests, excluding mineral and oil deposits.

Capital is limited to unsold stock and raw materials in the production process.

Labour refers only to physical human effort and excludes mental effort.

Entrepreneurs are individuals who take no risks in their business ventures.

Scarcity exists when demand for resources would exceed supply even at a zero price.

Economics is a natural science that studies individual phenomena and how individual agents make choices that allocate unlimited resources among competing ends.

Micro-economics focuses on observing the details of an economic unit, such as individual customers, workers, households, and business firms.

Firms obtain factors of production from households and pay for them, while households earn income by purchasing goods and services from firms.

The problems of low income and unequal distribution of resources are examples of economic issues that arise due to limited resources against unlimited wants.

Macroeconomics focuses on the detailed analysis of individual economic units like consumers, workers, and firms.