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Project of Basic Economics: Concepts


Economics, the study of how societies allocate resources and make decisions, is a fundamental discipline in understanding how the world works. It is the backbone of many aspects of our lives, from personal finance to global trade. At its core, economics is about choice and decision-making, and this is where the main concepts of economics come into play.

The first concept we will explore is Scarcity. Scarcity is the fundamental economic problem of having seemingly unlimited human wants and needs in a world of limited resources. It forces us to make tough choices and prioritize our needs. For example, a country may have an abundance of oil, but it still needs to decide how much of that oil to use domestically and how much to export.

The second concept, Supply and Demand, is like the invisible hand that guides markets. Supply refers to the quantity of a good or service that sellers are willing to sell at a given price, while demand refers to the quantity of a good or service that buyers are willing to buy at a given price. The interaction of supply and demand determines the market price of goods and services and is one of the most fundamental concepts in economics.

The third concept, Opportunity Cost, is the cost of forgoing the next best alternative when making a decision. It is what we give up to get something else. For example, if you choose to spend your money on a movie ticket, your opportunity cost is the value of the next best alternative that you could have chosen with that money, such as buying a book.

Lastly, we will discuss Economic Systems, which are the means by which societies allocate resources and make decisions about production, consumption, and distribution. The main types of economic systems are market economies, planned economies, and mixed economies.


Understanding these basic concepts of economics is not only essential for success in the field of economics but also for making informed decisions in our daily lives. Whether we're deciding how to spend our money, how much to work, or what to study, we're making economic decisions that are guided by these concepts.

Moreover, a solid understanding of these concepts can help us better understand the world around us, from why prices rise and fall, to why some countries are richer than others, to why some people are unemployed. It can also help us critically evaluate economic policies and proposals, which is especially important in a democratic society where we all have a say in economic matters through our votes and our voices.


Here are some resources that you can use to delve deeper into these concepts:

  1. Crash Course Economics - A series of fun and engaging YouTube videos that cover all the basic concepts of economics.

  2. Khan Academy: Economics and Finance - An online platform that offers free courses and lessons on various topics in economics.

  3. Economics: Principles, Problems, and Policies - A comprehensive textbook that covers all the essential concepts of economics.

  4. The Economist - A weekly international newspaper that covers a wide range of economic topics.

  5. Federal Reserve Education - A website that provides educational resources on economics and finance, including lessons, activities, and videos.

Practical Activity

Activity Title: "Decisions, Resources, and Economies"

Objective of the Project:

The main objective of this project is to understand and apply the key concepts of economics - Scarcity, Supply and Demand, Opportunity Cost, and Economic Systems - in a real-world context. By conducting a mini-economy simulation, students will gain a practical understanding of how these concepts interact and influence each other.

Detailed Description of the Project:

In this project, you and your group members will create a mini-economy simulation. This means you will create a small-scale economy with its own resources, goods, buyers, and sellers. You will then make economic decisions, observe the consequences of those decisions, and reflect on them in light of the key economic concepts.

Necessary Materials:

  • Paper and pencils for planning and record-keeping
  • Small items or tokens to represent resources and goods
  • A large table or poster board to set up your mini-economy

Detailed Step-by-Step for Carrying out the Activity:

  1. Form your team and plan your mini-economy: Divide into teams of 3-5 students. Brainstorm and plan your mini-economy. Decide what resources and goods your economy will have, how you will distribute those resources, and what the rules of your economy will be.

  2. Set up your mini-economy: Using the materials provided, set up your mini-economy on the table or poster board. Assign roles - who will be the buyers, who will be the sellers, and who will manage the resources.

  3. Run your mini-economy: Start the simulation. Buyers can offer to buy goods from sellers, but sellers can refuse if they think the price is too low. Sellers can also decide how much to produce and at what price. The resource managers should ensure that resources are being used efficiently.

  4. Reflect and make adjustments: After a set time (e.g., 30 minutes to an hour), stop the simulation. Reflect on the outcomes. Did scarcity affect the decisions you made? How did supply and demand affect prices and production? What were the opportunity costs of your decisions? Did your economic system work well, or were there inefficiencies?

  5. Write your report: Based on your reflections, write a detailed report of your mini-economy simulation. The report should include the following sections:

  • Introduction: Contextualize the theme, its relevance, and real-world application, and the objective of your mini-economy simulation.

  • Development: Detail the theory behind the key economic concepts used in your mini-economy (Scarcity, Supply and Demand, Opportunity Cost, and Economic Systems). Explain how you planned and set up your mini-economy, and describe the decisions you made and the outcomes.

  • Methodology: Explain the steps you followed in your mini-economy simulation and the materials you used.

  • Conclusions: Reflect on the outcomes of your mini-economy simulation. What did you learn from the project? How did it deepen your understanding of the key economic concepts?

  • Bibliography: List the resources you used to prepare for the project.

Project Deliverables:

  • A mini-economy simulation report, detailing your reflections and learnings from the project.
  • Your mini-economy setup, if possible, for presentation during the class discussion of the project.

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Basic Economics: Concepts


Economics is a fundamental field of study that impacts our daily lives. It's the science that helps us understand how a society uses its resources to produce valuable goods and services and distribute them among different people. By studying economics, we can understand how we, as individuals and as a society, make choices, and how we can make better ones.

The most basic principles of economics revolve around scarcity, opportunity cost, supply, and demand. Scarcity refers to the basic economic problem of having seemingly unlimited human wants and needs in a world with limited resources. Opportunity Cost reflects the alternative that must be given up when we make a choice, the second-best choice we could have made. Understanding these concepts is crucial to comprehending how economies function.

Supply and Demand are two of the most fundamental economics concepts, explaining the interaction between the sellers of a resource and the buyers of that resource. The behavior of buyers (demand) and sellers (supply) determines the market price and quantity of goods traded in a market. Understanding this interaction is key to understanding market dynamics and the price system in a capitalist economy.

These concepts affect our daily lives, from the price we pay for goods and services, to major policy decisions made by governments. Understanding these basic principles of economics will empower you to make informed decisions both in your personal life and as a citizen.

Now, it's time to explore economics on your own and discover how it shapes the world we live in. To help you get started, we suggest the following resources:

  1. Crash Course in Economics: a series of engaging video lessons that introduce various concepts in economics.
  2. Khan Academy's Course on Microeconomics: these lessons and practice exercises will help you understand the fundamental principles of economics.
  3. Basic Economics by Thomas Sowell: a comprehensive book that explains fundamental economic concepts in a straightforward language. It is available in most libraries and online book stores.

Get ready to embark on an exciting journey through the world of economics!

Practical Activity

Activity Title: "Exploring Economic Concepts: A Mini-Market Simulation"

Objective of the Project

The purpose of this project is to enable students to understand the fundamental concepts of economics - scarcity, opportunity cost, supply, and demand- and how they function in real-world scenarios. This goal will be achieved by creating a simulation of a mini-market in the classroom.

Detailed Description of the Project

This project involves a real-time application of economic concepts through an interactive activity. Students will be forming teams and each team will either play the role of a buyer or a seller in the mini-market. The sellers will be given a set of goods with different quantities (representing limited resources), and they will have the freedom to set prices. The buyers will be given a certain amount of play money, with which they can purchase items from the sellers.

The goal for the sellers is to make a profit by selling their goods, and the goal for the buyers is to purchase what they need within their budget. Through this simulation, students will see how the prices of goods fluctuate according to supply and demand, and they will experience firsthand the challenge of making decisions under scarcity and weighing opportunity costs.

Necessary Materials

  1. Variety of goods (you can use things like stationery, snacks, etc.)
  2. Play money
  3. Tables and chairs to set up "market stalls"
  4. Price tags
  5. Notebooks and pens for note-taking

Detailed Step-by-Step for Carrying Out the Activity

  1. Divide the class into groups of 3-5 - half of the groups will be sellers and the other half will be buyers.
  2. Distribute the goods among the sellers. Ensure there is a variety in the quantity of each good to demonstrate the concept of scarcity.
  3. Provide each of the buyers with a fixed amount of play money.
  4. Allow the sellers to decide the price of their goods (this is the initial supply price).
  5. Open the market for business. Buyers will start to purchase items of their choice, attempting to maximize their satisfaction within their budget.
  6. Buyers and sellers are free to negotiate prices. Observe the fluctuation of prices (law of supply and demand) and the decision-making process of the students (understanding the concept of opportunity cost).
  7. At the end of the activity, have each group reflect on their experience, discuss the economic concepts that they observed during the simulation, and prepare a report on the activity.

Project Deliverables

Each group will submit a written report detailing the following sections:

  1. Introduction: Here, students should introduce the project, explain why understanding basic economic concepts is important, and its relevance in the real world. They should detail their goal(s) in the project and briefly summarize their experience.

  2. Development: This section should explain the concepts of scarcity, opportunity cost, and supply and demand in detail, relating these to the mini-market simulation. The students should discuss how they applied these concepts during the activity, the challenges they faced, the decisions they made, and why. They should also describe the methodology and steps they followed.

  3. Conclusions: In this section, students should revisit the primary aims and objectives of the project, explicitly state the learnings obtained, and make conclusions based on their experience in the project. They should also include their thoughts on how they could apply these learnings in real-world situations.

  4. Bibliography: Here, students must list all the resources they used to work on the project, like books, web pages, and videos.

At the end of the project, students will have a better understanding of the concepts of scarcity, opportunity cost, supply, and demand. They will develop essential skills like decision making, negotiation, collaboration, and critical thinking, among others. This practical approach will help students connect theoretical knowledge with real-life application, which is the essence of learning economics.

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National Income


Introduction to National Income

National Income is a fundamental concept in economics that provides an understanding of a country's economic health. It is the total value of all goods and services produced within a country's borders in a specific time period, typically a year. It's an important metric used by economists, policymakers, and governments to measure economic growth and development.

National Income is not just about the production of goods and services. It also includes the income earned from abroad, which is essentially the difference between the value of goods and services a country imports and exports. The concept of National Income is broad and encompasses various measures, such as Gross Domestic Product (GDP), Gross National Income (GNI), Net National Income (NNI), and Personal Income.

The Significance of National Income

National Income is a key indicator of a country's economic performance and standard of living. A high National Income signifies a high level of production and economic activity, suggesting a strong and vibrant economy. It also implies a higher level of income and wealth available to the citizens, translating into a better standard of living.

In contrast, a low National Income indicates lower levels of production and economic activity, which can lead to a lower standard of living for the citizens. Understanding National Income is crucial for policymakers as it helps them make informed decisions on issues such as taxation, public spending, and economic policies to stimulate growth and development.

National Income and Real World Application

National Income and its various components have a direct impact on our daily lives. Economic growth, as measured by National Income, is often accompanied by increased employment opportunities, better infrastructure, improved access to education and healthcare, and a higher standard of living for the citizens.

In times of economic downturns, the National Income tends to decrease, leading to a slowdown in economic activity, job losses, and potentially, a decrease in the standard of living. Understanding the concept of National Income can help us make sense of these economic phenomena and empower us to make informed decisions about our financial well-being.

For example, understanding that a decrease in National Income might lead to a recession can help individuals and businesses make necessary adjustments to their financial plans and strategies to weather the economic storm.

Recommended Resources

  1. Khan Academy: National Income and Price Determination
  2. Investopedia: National Income - NI
  3. BBC Bitesize: National income
  4. Book: Economics by Paul A. Samuelson
  5. Book: Macroeconomics by N. Gregory Mankiw

Practical Activity

Activity Title: "The National Income Game"

Objective of the Project

This project aims to deepen your understanding of the concept of National Income and its various components. You will be simulating an economy, tracking its production, income, and expenditure over a specific time period. The goal is to accurately calculate the National Income and analyze its components.

Detailed Description of the Project

In groups of 3 to 5, you will create a microcosm economy. Each member of the group will assume a role, such as a worker, a business owner, a consumer, or a government official. Over a simulated time period of one week, you will engage in economic activity, producing and consuming goods and services, making transactions, and paying taxes.

At the end of the week, you will use the data collected to calculate the National Income. This will involve understanding and applying the concepts of GDP, GNI, NNI, and Personal Income. You will also have to analyze the composition of the National Income, identifying the major contributors and the impact of various economic activities.

Necessary Materials

  • Notepads or notebooks for each group member
  • Pens or pencils for each group member
  • A large poster board or a digital medium (such as Google Slides or PowerPoint)
  • Calculators
  • Access to the internet or a library for research

Detailed Step-by-Step for Carrying Out the Activity

  1. Role Assignment and Economy Setup (2 hours): Each group member should choose or be assigned a role (worker, business owner, consumer, government official) and write down their role's responsibilities and sources of income. Then, as a group, create a 'blueprint' of your economy, including the types of businesses, the number of workers, and the average income.

  2. Daily Economic Activity (4 hours): Over the simulated week, engage in economic activities. Workers should 'work' in their assigned businesses, producing goods or providing services. Consumers should 'buy' goods and services, and business owners should 'sell' their products. Government officials should 'collect taxes' and 'provide services'.

  3. Data Collection (2 hours): Each day, record the transactions, income, and expenditure in your notepad or notebook. Be sure to note down details such as the type of transaction (sale, purchase, tax payment), the amount, and the parties involved.

  4. National Income Calculation (2 hours): At the end of the week, use the data to calculate the National Income. This will involve understanding and applying the concepts of GDP, GNI, NNI, and Personal Income. You may need to do some additional research to understand and apply these concepts correctly.

  5. Data Analysis and Report Writing (4 hours): Analyze the composition of the National Income, identifying the major contributors and the impact of various economic activities. Each group member should also write a report on the project, following the guidelines provided.

Project Deliverables and Report Writing

At the end of the project, each group will submit the following:

  1. National Income Calculation: A detailed report of how you calculated the National Income, including the formulas used, the data collected, and the results obtained.

  2. Data Analysis: A discussion on the composition of the National Income, identifying the major contributors and the impact of various economic activities. Use the data collected and the concepts learned to support your analysis.

  3. Role Descriptions: A detailed description of each role in your economy, including the responsibilities, sources of income, and the impact on the National Income.

  4. Project Report: A comprehensive report on the project, following the structure of introduction, development, conclusion and used bibliography.

    • Introduction: The context of the project, its relevance, real-world application, and the objective of the project.

    • Development: Detailed explanation of the activity, methodology used, the theory behind the concept of National Income and how it was applied in the project, and a presentation of the obtained results.

    • Conclusion: A summary of the project, the learnings obtained, and the conclusions drawn about the concept of National Income and its real-world application.

    • Bibliography: List of the resources used for the project (books, web pages, videos, etc.).

  5. Group Presentation: Each group will present their findings and insights from the project to the class, summarizing their roles, the economy they created, and the National Income calculation and analysis.

Remember, the goal of this project is not to create a perfect simulation of an economy, but to understand and apply the concept of National Income in a fun and interactive way. Good luck and happy econo-gaming!

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Competition Model: Production e Cost


In the study of economics, understanding how firms make production decisions is a fundamental concept. One model, in particular, that helps explain these decisions is the Competition Model of Production and Cost.

This model assumes that firms are profit maximizers, meaning they aim to produce the quantity of goods or services that will generate the highest profit. It also assumes that firms operate in a competitive market where there are many buyers and sellers, and no single firm can influence the market price.

The first component of this model is the Production Function, which shows the maximum amount of output a firm can produce with a given set of inputs. In other words, it maps the relationship between inputs and outputs.

The second component is the Cost Function, which shows the lowest cost of producing a given level of output. This function is determined by the prices of inputs such as labor, capital, and raw materials.

The third component is the Profit Maximizing Level of Output, which is where the marginal cost of production, or the cost of producing one more unit, equals the marginal revenue, or the revenue from selling one more unit.

Understanding these components and how they interact can help businesses make informed decisions about what and how much to produce, how to price their products, and how to use their resources efficiently.

Importance and Real-World Context

The Competition Model of Production and Cost is not just a theoretical concept; it has real-world applications and implications. Almost every business, whether it's a small family-run store or a multinational corporation, has to make decisions about what and how much to produce and how to price their products.

Understanding this model can also help us understand the dynamics of the market. In a competitive market, for example, if one firm tries to charge a much higher price than others, customers can simply choose to buy from another firm. This helps keep prices down and encourages firms to be efficient.

Moreover, this model can also help us understand issues such as economic inequality. If, for example, a small group of firms in an industry has a lot of market power, they may be able to charge higher prices and make more profit at the expense of consumers. This can contribute to income inequality.


To delve deeper into the Competition Model of Production and Cost, you can consult the following resources:

  1. "Microeconomics: Production, Costs, and Perfect Competition" by Robert S. Pindyck and Daniel L. Rubinfeld. This textbook provides a comprehensive introduction to microeconomic theory, including the Competition Model.

  2. "Principles of Economics" by N. Gregory Mankiw. This book covers fundamental economic principles, including those related to production and cost.

  3. Khan Academy's microeconomics course. It offers a series of video lessons and practice exercises on various microeconomic topics, including the Competition Model.

  4. Investopedia's articles on the Competition Model and related concepts. It provides a more practical, real-world perspective on these topics.

  5. YouTube channels such as ACDC Economics and CrashCourse. They offer engaging, easy-to-understand videos on various economic concepts.

Remember, the goal isn't just to understand the theory but also to see how it applies to real-world situations. So, as you learn, try to think about how these concepts can help explain the economic decisions we see around us every day.

Practical Activity

Activity Title: "Exploring the Competition Model: A Production and Cost Simulation"

Objective of the Project

This project aims to provide a hands-on experience of how firms make production decisions in a competitive market using the concepts of the Production Function and the Cost Function. The students will simulate a simple competitive market, where each group represents a firm and will make decisions about what and how much to produce based on the given inputs and prices.

Detailed Description of the Project

The students will be divided into groups of 3 to 5 and each group will simulate a firm in a competitive market. The teacher will act as the "market" and set the prices of the inputs (e.g., labor, capital, raw materials) and the price at which the product will be sold.

The groups will then use these prices to determine their production level, cost, and profit. They will do this by constructing a Production Function and a Cost Function and using these functions to find the profit-maximizing level of output.

The simulation will be conducted over a series of "rounds," where each round represents a period of time (e.g., a month). At the end of each round, the groups will report their production level, cost, and profit to the market, and the market will adjust the prices for the next round based on the reported data.

The goal of each group is to maximize their profit over the course of the simulation.

Necessary Materials

  • Paper and pens for note-taking and calculation
  • Access to a computer with spreadsheet software (e.g., Microsoft Excel, Google Sheets) for constructing the Production and Cost functions and for keeping track of the simulation results.

Detailed Step-by-Step for Carrying Out the Activity

  1. Formation of Groups and Introduction to the Simulation (1 hour): The students will be divided into groups and the teacher will explain the rules and objectives of the simulation. The groups will then have some time to discuss their strategy.

  2. Construction of the Production and Cost Functions (1 hour): Each group will construct their Production and Cost functions based on the given inputs and prices. They can use a spreadsheet software to do this.

  3. Simulation Rounds (2-3 hours): The simulation will be conducted over several rounds. At the beginning of each round, the market will announce the prices for that round. The groups will then use these prices to determine their production level, cost, and profit. They will report their results to the market at the end of each round.

  4. Discussion and Reflection (1 hour): After the simulation, the groups will have a discussion about their results and what they learned from the simulation. They will also prepare their report.

  5. Report Writing (2-3 hours): Each group will write a report on the project, following the structure of Introduction, Development, Conclusion, and Used Bibliography.

Project Deliverables

The main deliverable of this project is a written report. The report should be structured as follows:

  1. Introduction: The students should introduce the topic, explain its relevance, and state the objective of the project.

  2. Development: The students should describe the theory behind the Competition Model of Production and Cost, explain the methodology of the simulation, and present and discuss their results.

  3. Conclusion: The students should revisit the main points of their work, state the lessons they learned from the project, and draw conclusions about the Competition Model of Production and Cost based on their experiences in the simulation.

  4. Used Bibliography: The students should list the sources they used to work on the project.

The report should not only demonstrate the students' understanding of the Competition Model but also their ability to apply this knowledge, work as a team, and think critically and creatively.

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