1. Economics
Economics is a social science that studies choices that
people, businesses, government and entire societies
make as they cope with scarcity.
There are two types of economics:
 Macroeconomics
 Microeconomics

2. Factors of production
Economics depend on the following four factors of
production:
 Land
 Labour
 Capital
 Entrepreneurship

3. Demand and Supply
If you demand something you:
 Want it
 Can afford it
 Plan to buy it

4. Law of Demand
The law of demand states:
Other things remaining the same, the higher the price
of a good, the smaller is the quantity demanded; and
the lower the price of a good, the greater is the
quantity demanded.

5. Factors bring changes in demand
Expected future prices
Income
Expected future income
Population
Preferences

6. Supply
If a firm supplies a good or service, the firm:
 Has the resources and technology to produce it,
 Can profit from producing it
 Plans to produce and sell it.

7. Law of Supply
Other things remaining the same, the higher the price
of a good, the greater is the quantity supplied; and
the lower the price of a good, the smaller is the
quantity supplied.

8. Factors that brings change in supply
 The prices of productive resources
 The prices of related goods produced
 Expected future prices
 The number of suppliers
 Technology

9. Elasticity
Price elasticity of demand is a unit free measure of
the responsiveness of the quantity demanded of a
good to a change in its price when all other influences
on buyers’ plans remain the same.
Calculating Price Elasticity of Demand
Price Elasticity of Demand:
Percentage change in quantity demanded
Percentage change in price

10. Types of elasticity of demand
 Perfectly inelastic demand
 Unit elastic demand
 Perfectly elastic demand