Lecture-01: Introduction to Economics
•Md. Mahfujur Rahman
•Lecturer
•Institute of Health Economics
•University of Dhaka
What is economics
Economics is the study of how people use
limited resources to meet their unlimited
wants and needs. It helps us understand
how individuals, businesses, and
governments make choices about what to
produce, how to produce it, and for whom
to produce it.
• Resources (like money, time, land,
labor) are scarce.
• Human wants and needs are
unlimited.
• Economics studies how we make
decisions to manage scarcity.
Basic Economic
Problems
Because resources are limited, all societies must
answer three fundamental questions:
1. What to produce?
1. Should a society produce more food, clothing,
education, or weapons?
2. How to produce?
1. Should goods be made using more labor or
more machines (capital-intensive vs.
labor-intensive)?
3. For whom to produce?
1. Who gets the goods and services? Rich or
poor? Urban or rural populations?
Types of Economic Systems
Type Description Example
Decisions are made by
Market Economy individuals and businesses USA
through free markets.
Government makes all North Korea, former
Command Economy
economic decisions. USSR
Combination of market
Mixed Economy forces and government Bangladesh, India, UK
involvement.
Types of Economics
Microeconomics Macroeconomics
Microeconomics
• Deals with individual units of the economy: consumers, firms,
industries.
• Focuses on individual units like consumers, firms, or industries.
• Demand and supply
• Consumer behavior
• Production and costs
• Market structures (perfect competition, monopoly, etc.)
• Factor markets (labor, land, capital)
• Looks at decisions made by households and businesses.
• Examples: How much should a company charge for a product?
Why do people buy less when prices rise?
Macroeconomics
• Looks at the economy as a whole.
• Focuses on big-picture issues like
• National income (GDP, GNP)
• Inflation and deflation
• Unemployment
• Fiscal and monetary policy
• Economic growth and development
• Balance of payments and exchange rates
• Examples: What causes a recession? How can the government reduce
unemployment?
Core Concepts in
Economics
•Scarcity: Limited nature of society’s resources.
•Choice: Decision-making due to scarcity.
•Opportunity Cost: The value of the next best
alternative forgone.
•Marginal Analysis: Decision-making based on
additional benefit vs. additional cost.
•Efficiency vs. Equity:
•Efficiency: Maximizing output from resources.
•Equity: Fair distribution of resources.
Positive vs. Normative Economics
• Positive Economics: Based on facts and can be tested.
Example: "An increase in the minimum wage will reduce
employment.“
• Normative Economics: Based on value judgments and opinions.
Example: "The government should increase the minimum wage."
Thank You
