CHAPTER I- NATURE, SCOPE AND
METHODOLOGY IN ECONOMICS

NATURE OF ECONOMICS

ECONOMICS-

Comes from the Greek oikonomia means management of a household, administration

is a social science that deals with efficient allocation of scarce resources to satisfy the unlimited wants and needs.

SOCIAL SCIENCE

Is the field of scientific knowledge and academic scholarship that explore social groups and, more generally, human society

RESOURCES

Things use to produce other things to satisfy people wants

WANT

is something that is desired. It is said that people have unlimited wants, but limited resources

NEED

Is something that is necessary for survival (such as food and shelter)

SCOPE OF ECONOMICS

TWO MAJOR BRANCHES OF ECONOMICS

MACROECONOMICS

Examines either the economy as a whole or its basic subdivisions or aggregates, such as the government, household, and business sectors
MICROECONOMICS

Looks at specific economics units. At this level of analysis, the economist observes details of an economics unit, or very small segment of the economy

ANALYTICAL TOOLS AND M
ETHODOLOGY USED IN ECONOMICS

rational self-interest

means that given a certain condition, individuals try to minimize the expected cost for a benefit or maximize the expected benefit with a cost.

Opportunity cost

It is cost associated with opportunities that are foregone when a firms resources are not put to their best alternative

is one of the most frequently used tools for modern economic analysis, deriving many important economic theories and models. It is also a powerful tool in analyzing individual decision-making process. Whoever you are, an individual, a company or a nation, you face opportunity cost when making decisions.

A second key