Textile and Apparel
Management
Lecture 1
Economics is the study of how
societies use scarce resources to
produce valuable commodities and
distribute among them
The two key themes lie in the
economics are scarce resources
Conceptualization
and goods and ensuring efficiency of Economics
in these scarce resources and
goods
Wants are unlimited while the
resources are limited
Given this unlimited wants, it is
important that an economy make
the best use of its limited
resources-this brings the critical
notion of efficiency Conceptualization
Efficiency denotes the most
effective use of a society’s
of Economics
resources in satisfying people’s
wants and need
Adam Smith is considered the
father of economics who is the first
one to distinguish economics from
home or household economics Branches of
However, in fact he is the founder
of the field of microeconomics
Economics with
Microeconomics is the branch of Background
economics which today is Overview
concerned with the behavior of
individual entities such as markets,
firms and households.
Adam Smith brought forward this
concept in his revolutionary work
titled The Wealth of Nation
The other major branch of
economics is known as Branches of
macroeconomics which is
concerned with the overall
Economics with
performance of the economy Background
Macroeconomics did not emerge Overview
until 1935 until John Maynard
Keynes published his revolutionary
General Theory of Employment,
Interest and Money
Economics-
-Studies how the prices of labor,
capital and land are set in the
economy, and how these prices are
used to allocate resources Scarcity and
-Explores the behavior of the Efficiency: Twine
financial markets, and analyzes how
they allocate capital to the rest of the Themes of
economy
Economics
-Examines the distribution of income
and suggests ways that the poor can
be helped without harming the
performance of the economy
-Looks at the impact of government
spending, taxes and budget deficits
on growth
-Studies the swings in Scarcity and
unemployment and production that
make up the business cycle, and
Efficiency: Twine
develops government policies for Themes of
improving economic growth
Economics
-Examines the patterns of trade
among nations and analyze the
impact of trade barriers
-Looks at growth in developing
Scarcity and
countries and proposes ways to Efficiency: Twine
encourage the efficient use of
resources
Themes of
Economics
Market Economy-One in which
individuals and private firms make
the major decisions about
production and consumption.
The extreme case of a market Economic System
economy, in which the government
keeps its hand off economic
decision is called a laissez-faire
economy
A command economy-is one in
which government makes all
important decisions about
production and distribution.
In short, in command economy, the Economic System
government answers the major
economic questions through its
ownership of resources and its
power to enforce decisions
