Lesson 3: Studying Economics (Uncovering the Past)
💰 Studying Economics
Economics is about how people use resources — like money, land, and time — to get what they need or want.
It’s about choices, trade, and why things cost what they do.
📉 Economic Fundamentals
⚖️ Scarcity and Choice
There are limited resources, but people have unlimited wants. This is called scarcity.
So people must choose:
Do I buy food or clothes?
Do I spend money now or save it? 💸
🛖 Example: Long ago, if a family had only a little wood, they had to choose — should they build a bigger house or use the wood to stay warm in winter?
📈 Supply and Demand
Supply is how much of something exists.
Demand is how much people want it.
📦 If there's a lot of something but not many people want it, it’s cheap.
🔥 If something is rare but many people want it, it becomes expensive.
🧂 Example: Long ago, salt was so valuable it was called “white gold”! Roman soldiers were sometimes paid in salt — that’s where the word “salary” comes from!
🎁 Incentives
An incentive is a reason to do something.
People work to earn money.
Stores give discounts to sell more.
Kings gave gold to soldiers to win wars. 👑⚔️
⚙️ Systems to Organize Resources
🧑🌾 Factors of Production
To make goods and services, we need:
Land – natural things (like water, trees, oil) 🌳
Labor – people working 🧑🏭
Capital – tools and machines 🛠️
Entrepreneurship – people with ideas and leadership 💡
🏺 Example: In ancient Mesopotamia, people used mud (land), workers (labor), and simple tools (capital) to build ziggurats.
🌍 Types of Economies
Traditional Economy – People do what their parents did (like farming or fishing).
Market Economy – People and businesses decide what to make and sell.
Command Economy – The government makes the decisions.
Mixed Economy – A mix of all three.
🏕️ Example: In traditional economies, Native American tribes often shared food and tools instead of using money.
🛒 Needs and Wants
Needs = things you must have (food, water, shelter) 🥖🏠
Wants = things you’d like to have (games, toys, ice cream) 🎮🍦
👩🌾 Example: In ancient times, people traded extra grain for tools. Grain was a need, but metal jewelry was a want.
People and countries must decide how to meet their needs and wants with limited resources.
🪙 Money and Trade
🔄 The History of Trade
Long ago, people used barter — trading one thing for another.
🐑 Example: A farmer might trade a sheep for five baskets of apples.
But bartering had problems — what if the apple-seller didn’t want a sheep?
💵 Using Money
To make trade easier, people started using money — first shells, then coins and paper.
Ancient China used cowrie shells 🐚
Lydia (modern Turkey) made the first coins around 600 BCE
Ancient Rome used silver and gold coins 🪙
Money makes it easy to:
Buy and sell
Save
Carry wealth
💎 Wealth
Wealth means having valuable things — like land, gold, or businesses.
🏰 Example: Kings in the Middle Ages became powerful because they owned lots of land and collected taxes from farmers.
📈 The Importance of Economics
🏗️ Historical Factors and Economic Growth
When people use their resources well, they can grow rich.
🛠️ Example: During the Industrial Revolution (1700s–1800s), people built machines to make clothes faster. This helped countries like Britain grow their economies.
More jobs → more money → better lives for many.
🤖 Increased Productivity
Productivity means doing more with less time or effort.
🚂 Example: When trains were invented, farmers could sell food far away. This made trade faster and helped towns grow.
🌟 Why Economics Matters
Economics helps us understand:
How people survive and thrive
Why goods cost money
How the world trades and grows
🌍 Whether it’s ancient salt roads or modern online shopping, economics shapes history and our lives today.