Welcome once again to home economics. In this first chapter we will define the concept of economics. Economics is the study of scarcity and its consequences in the use of resources, the production of goods and services, the growth of production and well-being over time. It concentrates mainly on the actions of people, assuming that all human beings act rationally and that they seek the most optimal level of benefit or utility. Origin of the economy One of the first recorded economic thinkers is the Greek poet Hesiod of the 8th century BC, who wrote that labor power, resources and time had to be allocated efficiently to overcome the problems of shortage. Since the time of the Greeks, economics has always been considered a branch of philosophy. However, this changed when the Scottish economist Adam Smith published in 1776 his book entitled "An Inquiry into the Nature and Causes of the Wealth of Nations." Thanks to this book, economics as a science would be born, marking the beginning of the modern western economy . The ultimate goal of the economy will always be to improve the living conditions of people and societies. Faced with this objective, the main problem facing the economy is to satisfy the unlimited needs of people with limited, that is, scarce resources. For example, diamond is a limited resource, it is not infinite, which means that the needs of all human beings cannot be satisfied with respect to diamond. For this reason, the concepts of efficiency and productivity are of utmost importance to economists. Achieving higher productivity and more efficient use of resources could lead to a higher standard of living. Types of economy The economy is divided mainly into two areas: microeconomics and macroeconomics. Macroeconomics studies the economy on a larger scale. His main areas of study are recurring economic cycles and the economic growth and development of countries and the world. The topics studied are foreign trade, fiscal and monetary policies of governments, the level of unemployment, inflation rates, interest rates, the GDP of a country, etc. In the video featured on the labels, we explain macroeconomics in more detail. Instead, microeconomics studies a series of smaller and more specific problems of an economy. People who work in this area can study, for example, how households decide to spend their money or how individual businesses operate. In other words, microeconomics focuses on the decision-making of economic agents. We also made a video explaining microeconomics in more depth in case you want to see it. As it cannot be otherwise, microeconomics and macroeconomics are closely related. The sum of all the microeconomic phenomena would give us the aggregate macroeconomic phenomena as a result . The most significant difference that we find between these two branches is their research tools . In each of them, theories, models and research methods very different from those used in the other branch are used. Even at times, macroeconomic models and theories appear to contradict microeconomic models and theories, and vice versa. With all this we say goodbye for today, if we have helped you and you want to continue learning we leave you two videos for you to click on based on YouTube recommendations. On the other hand, I would appreciate it if you would subscribe to our channel if it has been useful to you by clicking on our logo on the left side of the video. As always, any questions or suggestions please leave them in the comments so we can respond to you. See you in the next video.