Fundamentals of Economics. Доловова Н.Н - 5 стр.

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About Economy and Economics
The word economy comes from the Greek word for "one who manages a
household.'' At first, this origin might seem peculiar. But, in fact, households and
economies have much in common.
A household faces many decisions. It must decide which members of the
household do which tasks and what each member gets in return: Who cooks dinner?
Who does the laundry? Who gets the extra dessert at dinner? Who gets to choose
what TV show to watch? In short, the household must allocate its scarce resources
among its various members, taking into account each member's abilities, efforts, and
desires.
Like a household, a society faces many decisions. A society must decide what
jobs will be done and who will do them. It needs some people to grow food, other
people to make clothing, and still others to design computer software. Once society
has allocated people (as well as land, buildings, and machines) to various jobs, it
must also allocate the output of goods and services that they produce. It must decide
w ho w ill eat c aviar and w ho w ill eat potatoes. It must dec ide w ho w ill drive a
Porsche and who will take the bus.
The management of society's resources is important because resources are
scarce. Scarcity means that society has less to offer than people wish to have. Just as
a household cannot give every member everything he or she wants, a society cannot
give every individual the highest standard of living to which he or she might aspire.
Economics is the study of how society manages its scarce resources. In most
societies, resources are allocated not by a single central planner but through the
combined actions of millions of households and firms. Economists therefore study
how people make decisions: how much they work, what they buy, how much they
save, and how they invest their savings. Economists also study how people interact
with one another. For instance, they examine how the multitude of buyers and sellers
of a good together determine the price at which the good is sold and the quantity that
is sold. Finally, economists analyze forces and trends that affect the economy as a
whole, including the growth in average income, the fraction of the population that
cannot find work, and the rate at which prices are rising.
Although the study of economics has many facets, the field is unified by sev-
eral central ideas. In the rest of this chapter, we look at Ten Principles of Economics.
Key concepts
scarcity – the limited nature of society’s resources
economy – the system by which a country’s wealth is
pro duced and used
economics – the study of how society manages its scarce
resources; social science concerned with using
scarce resources to obtain the maximum
satisfaction of the unlimited material wants

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