BASIC LESSONS IN ECONOMICS Economics is a field of study that has come into being because there is scarcity of resources

to be solved by mankind. Had everything that man needed been abundant, there should have been no more need for Economics. It is because there is scarcity of resources, therefore, that Economics has been born to provide measures on how scarce but productive resources should be harnessed for the benefit of mankind. Economics is a social science that deals with the study of how society makes use of scarce but productive resources to better meet prescribed goals and objectives. It was first recognized in 1 ! when "dam #mith published his book entitled $"n In%uiry Into the &ature and 'auses of the (ealth of &ations) which is considered as the bible of Economics. He is today considered as the father of modern Economics. Economics is a science because like science itself, it is a systematic and orderly arrangement of knowledge on the proper utilization of scarce but productive resources. *ecause of scarcity, every individual can only produce something in a limited amount, not everything in unlimited %uantity. *ecause of limited capacity for production, every individual has to face three +,- basic economic problems. 1- what to produce, /- how to produce, and ,- for whom to produce. $(hat to produce) identifies the kind of product to be produced based on an individual0s capabilities and resources available. $How to produce) determines the ways and means how the product earlier identified to be produced should be produced at the lowest cost as much as possible to ma1imize efficiency. $2or whom to produce) identifies the target market for the product concerned3 that is3 as long as they continue to patronize the product at the right price, there will always be people willing to produce it for the consumers concerned. 4he four +5- factors of production in Economics are. 1- land, /- labor, ,- capital, and 5- entrepreneur. 6and refers to anything productive and useful that is provided by nature in its raw state. 6abor refers to the human e1ertion of both physical and mental effort. 4hese two efforts should always be together, not separate, so that something productive may result. 'apital refers to any good used to produce another good. It is different from 6and in that this is in its raw state while 'apital is land that has already been transformed by man into another state. 7oney is not capital in Economics, only in banking and finance, but the tool that can be bought by money is what serves as capital of the individual concerned, like the hammer of the carpenter, jeepney unit of the jeepney driver, and whiteboard marker of the professor. Entrepreneur refers to the individual with good administrative and management ability so that he turns a business into a profitable activity. He does this by combining land, labor and capital together so that their combination becomes productive. Economics has two +/- big branches, 7acroeconomics and 7icroeconomics. 7acroeconomics deals with the study of an entire economic aggregate, like national income, gross national product, and inflation. 7icroeconomics deals with the study of single or individual economic units. 4here is a need to part these two branches because sometimes an economic situation or reality is viewed differently from each of them. 2or e1ample, it is good for an individual to save but saving may not be good for the economy when everybody does it because this will stunt the economic growth of society. #ince aggregate demand being greater than aggregate supply in many cases is what serves to spur economic growth of the society, economic reality should therefore be viewed separately from such two big branches of Economics so that appropriate economic measures could be devised by the economic planners of the society.