Economics / Notes Topic 1 Nkangala District/2025
NKANGALA DISTRICT
ECONOMICS NOTES
TOPIC 1: BASIC ECONOMIC CONCEPTS
GRADE: 10
YEAR: 2025
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Economics / Notes Topic 1 Nkangala District/2025
TOPIC 1: BASIC ECONOMIC CONCEPTS
Description: Economics is a social science that study of how people make choices to
use scarce resources to satisfy their unlimited wants.
Three elements of the description of Economics are: scarcity of resources, choice
and social science
Scarcity of resources: resources such as land, minerals, money, and time are
available in fixed quantities. Therefore, this makes the supply of man-made products
scarce.
Resources also have more than one use, therefore if one resource is used for one
purpose, it will not be available for another purpose.
Make choices: people must choose which of their wants to satisfy with the limited
resources available. It is impossible to satisfy all human wants as resources such as
income are scarce.
Social science: Economics is a social science because it is about human beings and
their behaviour.
BRANCHES OF ECONOMICS
Economic activities are activities related to production, consumption and buying and
selling of goods and services.
Economics has the following branches:
Monetary economics:
The study of money and banking in a country.
It is concerned with how money is controlled and used in the exchange of goods and
services.
It also focuses on the role of banks and central banks.
International Economics:
It is the study of trade between countries across the world.
It gives information on how exporting and importing of goods and services works.
Globalisation is an important element of international economics.
Labour Economics:
It is the study of the country’s work force.
It includes topics such as supply and demand for labour, determination of wages, role
of labour unions and labour productivity.
Development Economics:
It is the study of strategies that can help to improve the economies and standard of
living in a country.
An increase in development leads to more people having jobs and being able to satisfy
their wants.
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Economics / Notes Topic 1 Nkangala District/2025
Public sector Economics:
It is the study of the role of a government in a country. It also includes taxes,
government budget and expenditure.
Regional Economics:
It is the study of a country’s specific geographic regions which produce certain goods
and services.
In South Africa Western Cape is known for the production of wines and Gqeberha
(Port Elizabeth) is known for the production of cars such as VW, BMW, Ford, Isuzu
and BIAC.
Environmental Economics:
It the study of the importance of the environment for sustainable economic growth.
It shows the environmental problems caused by economic decisions and potential
solutions to such problems.
Economic History:
It is the study of the history of economic activities.
It focuses on how people managed to survive, develop and prosper in the past.
APPROACHES IN ECONOMICS
There are two approaches to the study of Economics, namely Macroeconomics and
Microeconomics.
Micro-economics: is the study of individual elements of an economy such as
individual production decisions e.g. a producer choosing to supply product A Not B.
Issues such as the demand of a particular product at a particular price are also part of
microeconomics.
The expression ceteris paribus is an expression used in Microeconomics which makes
it possible to make assumptions (general statements).
Ceteris paribus means other things being equal (unchanged). For example, to say
the quantity demanded of a particular product depends on its price means with all
other things being equal (unchanged), the quantity demanded is influenced by only
one factor which is the price. In reality, the quantity demanded may be influenced by
many other factors such as income etc., but to be able to make any assumptions, the
phrase ceteris paribus is important.
Macro-economics
It is the study of the economy as a whole.
It studies all the economic aggregate in a particular country e.g. total demand, total
production, total unemployment, total income, inflation rate, economic growth rate
etc.
It gives a picture of how the entire economy performs, e.g. if unemployment is high,
total production of goods and services is low, and national income is low, then the
economy in general is not performing well.
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Economics / Notes Topic 1 Nkangala District/2025
THE METHODS OF ECONOMICS
Economists use statements, scientific methods and models in their study of
Economics.
Statements
Two kinds of statements used in Economics are positive and normative statements.
Positive statement:
Positive statement is a statement that involves facts.
It can be proven or disproved by comparing it with the information (data) available e.g.
if the statement says’ the economic growth rate in South Africa was 6,2% in 2019’,
while the information about the economic growth rate is that: the economic growth rate
was 0,15% in 2019. The statement will be disproved after looking at facts available.
Normative statement: is a statement which state an opinion or value judgement
Normative statement reflects a person‘s subjective judgement of an event.
The statements cannot be proved or disproved because they are not facts.
Example of normative statement: Rich people should pay more than 50% of their
income as tax.
The scientific methods
Economists use scientific methods to gather and interpret economic information in
order to make predictions.
They state the problem to be investigated, e.g. how pandemics (such as corona virus)
affect the economic performance.
Information (data) is collected and interpreted e.g. assess the number of goods and
services produced during the pandemic compared to before.
The explanation is given after interpreting the data e.g. pandemics cause economic
depression.
Models
A model is a simplified idea that represent an economic reality e.g. graph showing that
as price increase, demand decreases.
Models are presented in the form of diagrams, graphs, statements.
Models are used to explain and predict certain aspects about the economy.
For models to be used as representation of general truth, it must be tested.
DIFFICULTIES FACED BY SOCIAL SCIENCES SUCH AS ECONOMICS
Conducting research in Economics is difficult because:
Economics is not an exact science: it studies human behaviour which constantly
changes. Human beings can also be biased in their judgement therefore; this means
even researchers' feelings can contribute to problems of subjectivity.
Different economists have different views: on how the economy should work. For
example, one may believe in a weaker rand as it may promote exports while another
may favour a stronger rand as it may make imports cheaper.
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Economics / Notes Topic 1 Nkangala District/2025
Economists have to decide which facts to use: Statistics on the performance of the
economy are produced constantly, so this may make it difficult for Economic
researchers to have the same explanation for a particular research problem (if they
used different statistics).
Running experiments is difficult: unlike in pure sciences such as physics where
chemical variables can be controlled as per the wish of the researcher. Economics
cannot control variables. For example, to see whether price increases cause
decreases in demand, they have to assume that other factors remain constant (ceteris
paribus).
SETTING OF ECONOMICS WITHIN THE FIELD
Economics has a relationship with several subjects which are also concerned with
some aspects of the economy. These subjects are also in the Economics and
Management field and are the following:
Accounting: it deals with keeping records, and drawing up financial statements in
order to draw conclusions e.g. whether a firm makes a loss or profit. This information
is used by Economists in making predictions.
Business Studies:
Studies the functioning of the business world.
Economists are interested in how businesses produce goods and services to satisfy
wants and needs while also making a profit.
Commercial law:
It deals with the legal aspects of the economy such as buying, selling and contracts.
An economy can function best if participants can honour their agreements whether in
buying or selling to others.
Financial Mathematics:
It deals with calculations of aggregates (totals) in the economy e.g. GDP, GNI.
Economists use these totals to determine the growth of the economy.
RELATIONSHIPS WITH OTHER SUBJECTS
Economics has a relationship with subjects that are outside the Economic and
Management Sciences but which are beneficial to the economy. Those subjects are:
Statistics: the science of collecting, classifying and analysing data and this is used
in Economics when doing research.
Mathematics: Numbers and calculations are used in Economics.
Information Technology: Computers are essential tools and the internet provide
information and ways of communication for Economists.
Law: Economists have to understand laws relating to issues such as contracts, and
taxation.
Politics: influences economic issues such as budgets, and taxes as the ideology of
the ruling party often is reflected in how they are carried out. For example, a
government concerned with the poor may increase the budget for social security
services and increase taxes on the rich.
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Economics / Notes Topic 1 Nkangala District/2025
Sociology: studies the nature of human society such as culture, and this relates to
Economics as it is also concerned with human behaviour.
Geography: is concerned with the earth and its physical environment.
This is important for international Economics as participants can know where their
clients or suppliers are in the world.
CAREER OPPORTUNITIES IN ECONOMICS
Economics is important in a number of the field such as banking, financing, tourism,
government administration and labour unions.
An economist plays the role of analysing the performance of different markets
related to the organisation he/she work for.
