Introduccion A La Economia

Introduction to Economics – Task 1

Explain and evaluate the nature and scope of economics and the problems which economics attempts to address.

Our day to day life is about economics, every choice we make is about economics, but what does this word actually mean? There is not an exact definition of economics but we can consider it to be a social science which deals with the production anddistribution of goods, based on the needs and wants of people, and how they choose to use those resources to satisfy their needs. It is a social science because it is not exact; it studies human society and their behaviour. It is also necessary to take into account that is not possible to always get everything that is wanted or needed. This will be considered to be the economic problem.Humans have unlimited wants and would love to have everything they wish but unfortunately the resources have an end, this is what is called scarce resources.
Scarcity is the relation between the amount of resources existing and how much is wanted or needed of them. A good or a service becomes scarce as soon as people start paying for it. Wants are always more than what can be produced from thelimited resources. For example, clothes. Clothes are scarce because people cannot have all the clothes they want, despite their wants being unlimited, so they will have to make choices. If it was free, it would not be a scarce resource. By making a choice another option is forgone which is what we call the opportunity cost.
Those scarce resources can be divided into 4 groups:
1. Land: Are all thenatural resources, for example oil, minerals, land, water or animals. These resources are not forever as there will be a point where the land will not be able to produce more of them and so people will not get everything they want. An example of this will be cars, people need to go from one place to other quickly and safely so they buy cars, but to be able to use this good they will need oil so thecar can work properly and take them wherever they need, but there will be a point where this oil will finish and so the cars will stop working.
2. Labour: Is the effort people have to put in order to get the goods they want, this effort can be physical or mental, for example using of the time they could be doing something else, skills and talents. This will be reflected on everybody as they do ajob which will produce goods for people and money for them to be able to buy other goods they may want.
3. Capital: Are the tools humans use to get those goods and services, the capital complements the labour, for example machinery is used by people to make the goods they desire. Let’s use the car example again, if there were no machinery, there will not be as much cars as there are now, sopeople will not be able to get this good to satisfy their needs, and those few that are able to get a car will have to pay a lot of money because of the low production and the high cost it will require to be produced.
4. Entrepreneurship: Entrepreneurs are those people who are innovative and in charge of taking risks, and with those risks bring rewards, these being maybe the beginning of newbusinesses or the strengthening of existing companies.

Due to the limited resources mentioned above people need to make choices as they cannot get everything they want. This problem would then lead people to what is called opportunity cost. It is what people have to give up when choosing something. Scarcity forces people to choose, but those choices make people leave other things behind as theycannot get everything at the same time. For example, a person who chooses to do a business course in college is giving up the time he/she is using to do the course, time they could be using doing something different as working, going out, sleeping or doing other type of course.
The government for example is forced to make choices too due to scarce resources. They need to choose how to use the...