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Lionel Robbins who defined economics as the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.' Economics is a social science - a systematic study of human actions in a social context. It is distinguished from other social science, such as political science, psychology, and sociology, by the kinds of actions and social institutions with which it is concerned. In addition, common problems among different types of economies include what goods to produce and in what quantities (consumption or investment, private goods or public goods, meat or potatoes or types of goods and services quantities), how to produce them (coal or nuclear power, how much and what kind of machinery, who farms or teacher or the method of production), and for whom to produce (reflecting the distribution of income from output or refers to the national problem of how the national output should be distributed among the population). Briefly, the actions that economics is concerned with are the choices people make when faced with scarcity, and the social context is the rules, laws, and customs that tell which choices are permitted and which are forbidden. Economics is the study of human actions in a social context, especially as those actions are directed towards the use of scare resources to satisfy potentially unlimited wants.
Most people have virtually unlimited wants. We desire various goods and service that provide utility. Our wants extend over a range of products, from necessities (foods, shelter, and clothing) to luxuries (perfumes, yachts and sport cars). Other wants, for example, specific kinds of food, clothing, and shelter, arise from the conventions and customs of society. Over time, as new and improved products are introduced, economics wants tend to change and multiply. Services, as well as goods, satisfy our wants. Cars repair work, the removal of an inflamed appendix, legal and accounting advice, and haircuts all satisfy human wants. Actually, we buy many goods, such as automobiles and washing machines, for services they render. The differences between goods and service are often smaller than they appear to be. Our desires for particular good or service can be satisfy, over a short period of time we can surely get enough toothpaste or pasta. And one appendectomy is plenty. But our broader desire for more goods and services and higher -quality goods and services seems to be another story. Because we have limited income (usually through our work) but seemingly insatiable wants, it is in our self-interest to economize, to pick and choose goods and services that maximize our satisfaction.
Scarcity is a universal fact of human experience .From economist's point of view is measured not in physical terms but in terms of human wants. The potentially unlimited nature of human wants means that we can never have enough of every things we wants ,or enough at one time ,or enough soon enough .The facts of scarcity means that we must always be making choices. As an example, how should be divide our limited incomes between food and shelter? Choices like these underlie all economic action. A choice also lets limited income forces people to choose what to buy and what to forgo to fulfil wants. As an example, Alice will select the combination of DVD's and paperback books that Alice think is 'best'. That is, she will evaluate her marginal benefits and marginal cost (product price) to make choices that maximize her satisfaction. However, other people with the same $120 gift card would undoubtedly make different choices. No matter how hard we try , we cannot escape the fact of scarcity and the necessity of choice .Abundance of material goods will not get us off the hook .Even the wealthiest people have limited time and must constantly be choosing what to do and what to leave undone . Nor is it possible to escape scarcity and choice by consciously limiting wants.
Each country has certain finite resources, which economics generally divide into four categories. Resources, it also call as factors of production .The basic input of labour ,capital, and natural resources used in producing all goods and services . Land means much more to be economist than it does to most people .To the economist land includes all natural resources used in the production process, such as arable land, forests, mineral and oil deposits, and water resources. Without this resource, the business man cannot run the business properly this is because the business man cannot run a business without that building on the land. In addition, the economics will also going down.
The resource labour consists of the physical and mental talents of individuals used in producing goods and services. The services of a logger, retail clerk, machinist, teacher, professional football player, and nuclear physicist all fall under the general heading "labour". Labour is an important resource in a business area. It is because there is no one company or firms have without employees that also can run the business and earning profits. Even though that company or firms have many capital, material that to produce product, have good facilities or high salary, but there have no employees that company or firms means nothing. Furthermore, for economists, capital or capital goods include all manufactured aids used in producing consumer goods and service. Included are all factory, storage, transportation, and distribution facilities, as well as tools and machinery. Economics refers to the purchase of capital goods as investment. In addition, this is important to ensure that available resources especially labour are fully employed to produce more goods and services. When labour, land, and capital are fully employed, more income will be earned such as wages, rental, and interest resulting higher expenditures among of the owner of the factor of production (land, labour, and capital respectively). Excess production may also be exported to other countries to earn foreign exchange, making a country economically stronger, in relation to the rest of the world. However, there are some countries with high unemployment will tend to have more economic and social problems, such as higher crime rates and corruption activities since people may resort to illegal means to get money and health problems and malnutrition since some people will not earn enough to eat or to have proper diets.
Capital goods differ from consumer goods because consumer goods satisfy wants directly, whereas capital goods do so indirectly by aiding the production of consumer goods. Note that the term "capital" as used by economists refers not to money but to tools, machinery, and other productive equipment. This is because money produces nothing; economists do not include it as an economic resource. Money or money capital or financial capital is simply a means for purchasing capital goods. Capital is the first resource to start the business. In this world, no matter we are selling goods or services or we are buying goods or services all of us are using money to exchange the goods or services.
Moreover is entrepreneur. The entrepreneur performs several functions. The entrepreneur takes the initiative in combining the resources of land, labour, and capital to produce a goods or a service. Both a sparkplug and a catalyst, the entrepreneur is the driving force behind production and the agent who combines the other resources in what is hoped will be a successful business venture. The entrepreneur makes the strategic business decisions that set the course of an enterprise. In addition, the entrepreneur is an innovator. He or she commercializes new product, new production techniques, or even new forms of business organization. This means an entrepreneur must also have creative and a powerful idea to produce a new creative and useful product, so that can competition with other business man. The entrepreneur has no guarantee of profit. The reward for the entrepreneur's time, efforts, and abilities may be profits or losses. This is because an entrepreneur may not earn profits all the time, the reason is they might sell the similar product or the economic is not well. So that, consumers might buy the goods lesser. The entrepreneur risks not only his or her invested funds but those of associates and stockholders as well.
In short, land, labour, capital, and entrepreneur are combined to produce goods and services; they are called the factors of production or also called as input.
Opportunity cost, cost is a second concept central to the economic way of thinking. In a world of scarcity, it is rare to get something for nothing. Typically, we must bear costs to obtain benefits. In ordinary conversation, people tend to use the term cost rather loosely, economists are more careful about what they mean by it. The key cost concept in economics is that of opportunity cost- the cost of doing something, as measured in terms of the value of the lost opportunity to pursue the best alternative activity with the same time or resources. In many cases, the opportunity cost of doing something is properly measured in terms of money out of pocket. For example, the opportunity cost of spending a dollar for a hamburger is the loss of the opportunity to spend the same dollar on a bratwurst instead. In other cases, activities that have no money cost have important opportunity cost in terms of time. For example, an hour spent studying economics is an hour not available for studying biology or French. The following case study uses a familiar situation in order to illustrate the concept of opportunity cost. In addition, the cost of doing something that is measured in terms the value of the lost opportunity to pursue the best alternative activity with the same time or resources.