Economics is based on rational decision-making and optimal marginal analysis. Society must decide what, how, and for whom to produce. Economic models use assumptions and hypotheses to analyze economic phenomena. Microeconomics focuses on individual markets, while macroeconomics examines overall economy
Capitalism is based on private ownership and profit-driven production. It features private property, competition, and wage labor. Capital accumulation drives economic growth through market mechanisms. Markets determine prices and distribution through competition
Classical economics flourished in Britain during late 18th-early 19th centuries. Smith's 1776 "Wealth of Nations" marked beginning of classical economics. Smith identified national wealth as determined by national income, not monarch's wealth. Classical economists advocated market freedom with state support for common good
Laissez-faire means "let you do" in French and originated from 1681 meeting between Colbert and Le Gendre. Developed by French Physiocrats during 18th century as opposition to government intervention. Advocates minimal government involvement in business affairs
Classical economics emerged in 18th-19th centuries, with Adam Smith as progenitor. Spanish scholastics and French physiocrats made earlier contributions. Theory developed after birth of western capitalism and Industrial Revolution