Principles of Economics second edition All Rights Reserved
© Oxford Fajar Sdn. Bhd. (008974-T) 2010 Ch. 1: 1
CHAPTER 1
INTRODUCTION
Principles of Economics second edition All Rights Reserved
© Oxford Fajar Sdn. Bhd. (008974-T) 2010 Ch. 1: 2
DEFINITION OF ECONOMICS
Economics is a science which studies human
behaviours as a relationship between ends
and scarce which have alternative uses.
OR
Economics is a study of how people use their
limited resources to try to fulfil unlimited
wants and involves alternatives or choices.
Principles of Economics second edition All Rights Reserved
© Oxford Fajar Sdn. Bhd. (008974-T) 2010 Ch. 1: 3
MICROECONOMICS VS.
MACROECONOMICS
MICROECONOMICS MACROECONOMICS
The study of The study of the
individual parts of the economic system as a
economy such as whole such as
public choices, national income, trade
business choices and cycle, unemployment
personal choices. rate, inflation and
general price level.
Principles of Economics second edition All Rights Reserved
© Oxford Fajar Sdn. Bhd. (008974-T) 2010 Ch. 1: 4
OVERVIEW OF HOSPITALITY INDUSTRY
• Accommodations
Involve a place where guests will be staying
Amenities
• Food & drink
Quality and availability which will impact customer’s
experience
It exhibit the status of the hotel
• Hospitality related concerns
E.g. transportation agency, travel agents, tour operators
Principles of Economics second edition All Rights Reserved
© Oxford Fajar Sdn. Bhd. (008974-T) 2010 Ch. 1: 5
SCARCITY
SCARCITY CHOICE
CHOICE
BASIC ECONOMIC
BASIC ECONOMIC
CONCEPTS
CONCEPTS
OPPORTUNITY
OPPORTUNITY COST
COST
Principles of Economics second edition All Rights Reserved
© Oxford Fajar Sdn. Bhd. (008974-T) 2010 Ch. 1: 6
BASIC ECONOMIC CONCEPTS
1. SCARCITY
One of the important concepts in economics is
scarcity.
Scarcity is defined as wants always exceed
limited resources to satisfy them.
Scarcity is a universal problem faced by poor
as well as rich nations in order to fulfil their
needs.
Principles of Economics second edition All Rights Reserved
© Oxford Fajar Sdn. Bhd. (008974-T) 2010 Ch. 1: 7
BASIC ECONOMIC CONCEPTS (cont.)
2. CHOICE
When scarcity exists, choices are to be
made.
3. OPPORTUNITY COST
Opportunity cost is defined as the second
best alternative that has to be forgone for
another choice which gives more satisfaction.
Principles of Economics second edition All Rights Reserved
© Oxford Fajar Sdn. Bhd. (008974-T) 2010 Ch. 1: 8
BASIC ECONOMIC PROBLEMS (cont.)
1. WHAT TO PRODUCE?
Refers to the type of goods and services to be produced
2. HOW TO PRODUCE?
Refers to the cheapest method of production
3. FOR WHOM TO PRODUCE?
Refers to the distribution of income
Principles of Economics second edition All Rights Reserved
© Oxford Fajar Sdn. Bhd. (008974-T) 2010 Ch. 1: 9
