1 Economics is the study of how society decides the allocation of resources among
alternative uses and the distribution of the society’s output among individuals
and groups in the most efficient method.
2 The central economic problem is how to reconcile the conflict between unlimited
wants and limited resources.
3 Any resource for which we have to pay is scarce.
(not available in unlimited quantities at a zero price)
4 The economic resources are labour, capital, land, and entrepreneur that is
required to produce goods and services.
(those resources are called factors of production, and paid by wages, interest,
rent, and profit respectively)
5 The problem of scarce lead to the concept of choice.
The choice is subjected to the ability to pay. So, the more choice of one thing
means less choice for something else.
6 The forgone alternatives of goods and services that is implicated by choice is
namely opportunity cost.
The central concerned of opportunity cost is the value of the forgone
alternatives.
7 Scarce, choice, and opportunity cost are the problems of economics.
Further discussions should be done by a very basic economic’s tool analysis,
i.e. the production possibility frontier curve.
8 One must distinguish between the problems of economics and the basic problems of
economics. The basic problems of economics emphasized society’s problem of
choosing what gets produced, how to produce, and for whom to produce.
9 Apart from the problems, and the basic problems, the economics study move to
discuss economic systems.
Four major economic systems are:
i- (free) market or laisezz faire,
ii- centralized planning or socialist;
iii – mix (between market with planning); and
iv – Islamic.
10 The free market system rely on price mechanism.
The so-called invisible hand is actually observed the react to the state of
demand and supply. Thus, such a maxim that the consumer is king reveals only
half the truth. The other half is souvereignty to producers. The consumer’s
action is about to maximize satisfaction (the theory of utility), and the
producer to maximize profit.
11 The centralized planning system ia about the fully government control of the
economic actions, namely consumption, production, and distribution. The main
idea is the government’s role to maximize welfare of the society.
12 The mix economic is the combination of both free market and centralized
planning.
13 Islamic economic system stressed on the teaching of al-Qur’an and al-Sunnah
to guide economic activities. There is no compartmentalization of the so-called
positive economic and normative economic.
So, the idea of Islamic thought is gradually installed to the contemporary
economics model, theory, and law.
14 Microeconomics concern individual unit
behavior, while macroeconomics concern
with aggregate (whole).
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