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DEFINITION
1. Economics is the study of how societies use scarce
resources to produce valuable commodities and
distribute them among different people.
APPLE C. DORIG
ECON01 – Intro to Economics 1
2. Economics may be defined as a science that deals
with the activities of man in obtaining wealth for
the satisfaction of his wants.
DIVISION OF ECONOMICS
HISTORY OF ECONOMICS
It has started to be known when Adam Smith’s book
Wealth of Nations was published in 1776. Prior to
that, economics has been integrated into other fields
such as religion, philosophy and political science. That
book became the bible of economics for more than a
century. Adam Smith was responsible for the
recognition of economics as a separate body of
knowledge. Economics have been as old as mankind.
It started when God drove Adam and Eve away from
the Garden of Eden. Economic thoughts appeared in
biblical teachings, philosophy and politics. The
primitive people invented ways and means of food
gathering and hunting. Such art of making a living
among the ancient tribes represented a form of
economics.
APPLE C. DORIG
ECON01 – Intro to Economics 3
The word “economics” has been derived from the
Greek word oikonomia. It means household
management. The housekeeper has to see to it that
there is enough food, clothing and shelter; that the
house is kept in order; that the necessary duties and
responsibilities are performed by the members of the
household; and that their products are distributed
according to necessity. To the ancient Greeks, the
term oikonomos applied more on the proper
management of the city-states. As a science,
economics emerged only in 1776
1. Capitalism
Here, the factors of production and distribution are
owned and managed by private individuals or
corporations. We can use different terms like
market economy, free-enterprise economy, or
laissez faire economy for capitalism. The essential
characteristics of capitalism are:
Private property free competition
Economic freedom profit motive
2. Communism
It is the opposite of capitalism. The factors of
production and distribution are owned and
managed by the state. It is also known as the
command economy or classless economy. The
essential characteristics of communism are:
No private property no free competition
No economic freedom no profit motive
APPLE C. DORIG
ECON01 – Intro to Economics 5
Presence of central planning
3. Socialism
It is a combination of capitalism and communism.
The major industries are owned and managed by
the state while the minor industries belong to the
private sector.
APPLE C. DORIG
ECON01 – Intro to Economics 6