MFK ISB544 Topic 1 1

At the end of the lessons, students should

understand the following:
 The fundamental nature of economics -

unlimited wants and scarce resources and

the need to make choices.
 A definition of opportunity cost.

MFK ISB544 Topic 1 2

 Economics
 Feudalism
 Capitalism
 Socialism

MFK ISB544 Topic 1 3

• Derive from Ancient Greek word of oikos
(house) and nemein (to manage).

MFK ISB544 Topic 1 4

• Choices people and societies have to
make
• Why do people and societies have to
make choices?
• But, why can’t people and societies have
everything they want?
• Because our wants are greater than the
limited resources available to satisfy
them
• CONCEPT OF SCARCITY

MFK ISB544 Topic 1 5

• Choices people and societies have to
make
• Why do people and societies have to
make choices?
• But, why can’t people and societies have
everything they want?
• Because our wants are greater than the
limited resources available to satisfy
them
• CONCEPT OF SCARCITY

MFK ISB544 Topic 1 6

MFK ISB544 Topic 1 7
• Economist do not have preconceived
notion of what should and should not
concern them.
• Economist examine whatever has
attracted their interest using economic
analysis.

MFK ISB544 Topic 1 8

 Concept of scarcity

• Wants include anything that provides

utility or satisfaction.

MFK ISB544 Topic 1 9

Reflection !!!

MFK ISB544 Topic 1 10

Opportunity cost
• People have to make choice because
scarcity exists.
• Due to unlimited resources, some
wants must go unsatisfied.
• Hence, we must choose which wants
we will satisfy and which we will not.
• The most highly valued opportunity or
alternative forfeited when a choice is
made.

MFK ISB544 Topic 1 11

Definition:-
 “Science of how individual & societies deal with
the fact that wants are greater than the limited
resources available to satisfy those wants”
(Arnold).

 “The science of wealth” (Smith, Ricardo and

Mill).

 “The science which studies human behavior as

a relationship between ends and scarce means
which have alternative uses” (Robbins).
MFK ISB544 Topic 1 12
MFK ISB544 Topic 1 13
 At the end of the lessons, students should
understand the following:
 The fundamental nature of economics -

unlimited wants and scarce resources and

the need to make choices.
 A definition of opportunity cost.

MFK ISB544 Topic 1 14

i. Economic in general.
ii. Social and economic theories.

MFK ISB544 Topic 1 15

 Read on feudalism, capitalism and socialism.

MFK ISB544 Topic 1 16

THANK
YOU…

MFK ISB544 Topic 1 17

 At the end of the lessons, students should
understand the following:
 The profound characteristics of feudalism,

capitalism and socialism.

MFK ISB544 Topic 1 18

MFK ISB544 Topic 1 19
 Europe was in the Dark Ages between 400 AC and
1300 AC.

MFK ISB544 Topic 1 20

Politic and economic
 Europe was under the feudalist rule -economy was

dependant on farming.

 Trade and business were avoided because of two

reason:-
i. Church - predominant religious and political
power did not see this profession favourably.
ii. Europe was cut off from the continents – all
ocean routes were occupied by Muslims.

MFK ISB544 Topic 1 21

Politic and economic (ctd)

 The landowners and feudal lords gave small pieces

of land to farmers for cultivation which produce
was divided so that feudal lord had his share and
the church had hits share while the farmer got
what remained.

 The landowner could not take back his land once

he gave it to the farmer neither could the farmer
relieve himself and go elsewhere.

MFK ISB544 Topic 1 22

MFK ISB544 Topic 1 23
Politic and economic (ctd)

 In theory all land belonged to the King and no one

was considered its owner.

 In practice, the farmer was he slave of the land

owner and could never leave him.

 The feudal lord was so powerful that the king

could not interfere in his affairs with farmer.

 Execution of the rules also came into the hands of

the feudal lords.
MFK ISB544 Topic 1 24
Religion
 The hold of the Church.

 Prohibition to receive knowledge.

 The authority of Pope:-

i. people respect Pope more than the King.
ii. authority was not limited to religion but
extended over political affairs.

MFK ISB544 Topic 1 25

The downfall of Feudalism

MFK ISB544 Topic 1 26

 At the end of the lessons, students should
understand the following:
 The profound characteristics of feudalism,

capitalism and socialism.

MFK ISB544 Topic 1 27

 In 18th Century the Industrial Revolution
progressed very fast.

 Era of inventions new things and ideas were seen

in every field of life.

 As a result, the way of life had change completely.

MFK ISB544 Topic 1 28

*However, all this was prompted by sheer materialism –
religion was cast aside.
MFK ISB544 Topic 1 29
 The basic principle of this system is “unrestricted “
economy – remove all restrictions on political
economical and religious.

 Motivation:-
i. Everyone realise what is good or bad for him.
ii. He does nor need to be told how to regulate his
economic life.

MFK ISB544 Topic 1 30

 Private dealings between individuals are not
subject to government control.

 No limit in profit taking:-

i. profit motivation.
ii. Theory of shareholder.

MFK ISB544 Topic 1 31

 Religion is consigned to the four walls.

 Trade, industry and wealth evolve around interest,

gambling, speculation and commission.

 Wealth concentrate in a few hands.

 Small businessman is deny the opportunity.

MFK ISB544 Topic 1 32

 The poor become poorer; the rich become richer –
standard of living increase very fast.

 Automation – unemployment

 Society was divided into capitalist and labourers.

MFK ISB544 Topic 1 33

 Founded by Karl Marx, the German revolutionary
thinker, and his companion Friedrich Engels.
 An ideology that is different from every religion as to
its political, economic, moral and social aspects.
 Labour movement.
 Definition; collectivism or partnership.
 Does not recognise the individual.
 Hence, government alone is the owner of all resources,
and only it can frame policies of trade and industry as
well as execute them.
MFK ISB544 Topic 1 34
 Noble ideas of socialism:-
i. give the right to labourers and farmers.
ii. calls for equal distribution of wealth.

 Denying the natural rights of an individual that every religion

and ideology had granted before it.

 Socialism handed over to a single authority (government) all

resources of production and every political and social right.

 Individual is treated like a part of machine depriving his right

to select an occupation, express his opinion and to own
property.

MFK ISB544 Topic 1 35

 In 1919, Lenin overthrew Czar in Russia and
created the first socialist state known as USSR.

 In 1989, the USSR has collapse – the demise of

socialism ideology.

MFK ISB544 Topic 1 36

 At the end of the lessons, students should
understand the following:
 The profound characteristics of feudalism,

capitalism and socialism.

MFK ISB544 Topic 1 37

i. Economic in general.
ii. Social and economic theories.

MFK ISB544 Topic 1 38

 Read on worldview of Islam.

MFK ISB544 Topic 1 39

THANK
YOU…

MFK ISB544 Topic 1 40