Economics Starts From The Home And The Economist Explained for SHS 1 Economics (Semester 1, Week 1)

Economics affects everyday life because people constantly make choices about how to use limited resources to satisfy their needs and wants.

What You Will Learn

• The meaning of economics
• The concepts of goods, services, and resources
• The difference between microeconomics and macroeconomics
• The meaning of positive and normative economics
• Career opportunities available in economics

Main Explanation

Economics starts from the home because families and individuals use limited resources to satisfy unlimited wants. Scarcity means people cannot have everything they want at the same time.

Economics is therefore defined as the study of how individuals, businesses, governments, and societies allocate scarce resources to satisfy their needs and wants.

Goods are tangible items such as food, houses, clothing, and cars, while services are intangible activities such as teaching, healthcare, transport, and cleaning.

Resources, also known as factors of production, are used to produce goods and services. These resources include:

• Land
• Labour
• Capital
• Entrepreneurial ability

Economic agents such as households, firms, governments, and organisations make decisions about the use of resources.

Economics is divided into two major branches:

Microeconomics studies households, firms, industries, market interactions, and individual decision-making.

Macroeconomics studies the economy as a whole and focuses on variables such as GDP, inflation, unemployment, fiscal policy, and monetary policy.

Economics also distinguishes between positive and normative statements.

Positive economics involves factual and objective statements based on evidence. For example:

“Free primary education increased school enrolment.”

Normative economics involves opinions and value judgements about what should happen. For example:

“The government should provide subsidies for farmers.”

An economist is a professional who studies production, distribution, and consumption within an economy. Economists analyse economic trends, conduct research, and help organisations make informed decisions.

Economists can work in many fields, including:

• Government agencies
• Central banks
• Research organisations
• Investment banking
• Market research
• Entrepreneurship
• Consulting
• Policy analysis

Both men and women can pursue careers in economics and contribute to economic development.

Branches Of Economics

Branch	Focus	Example
Microeconomics	Individual consumers and firms	Pricing and consumer behaviour
Macroeconomics	The national economy	Inflation and unemployment

Positive And Normative Statements

Type	Characteristics	Example
Positive Economics	Objective and factual	Education increased enrolment
Normative Economics	Opinion-based and subjective	Government should support farmers

Worked Examples

Example 1

Scenario: A family has limited money and must decide whether to spend it on food, clothing, or school supplies.

Explanation: This situation demonstrates scarcity and the need to allocate limited resources to satisfy important wants and needs.

Example 2

Problem: Explain why “The government should reduce unemployment” is a normative statement.

1. Identify whether the statement expresses facts or opinions.
2. Determine if the statement uses value judgement.
3. Classify the statement correctly.

Answer: The statement is normative because it expresses an opinion about what the government ought to do.

Why This Topic Matters

Understanding economics helps learners make informed decisions about resources, spending, production, and development. Economics also provides valuable career opportunities in business, government, finance, and research.

Quick Practice

• Define economics.
• Differentiate between goods and services.
• State two career opportunities available for economists.

Summary

Economics studies how scarce resources are allocated to satisfy unlimited wants and needs. Important concepts include goods, services, resources, economic agents, microeconomics, macroeconomics, positive economics, and normative economics. Economists contribute to research, policy-making, entrepreneurship, and economic development in both public and private sectors.