Microeconomics - Chapter 1: Resource Utilization and Economics

Economics

the study of scarcity and how it affects the use of resources, the production of goods and services, the growth of production and well-being over time, and many other important and complicated issues that affect society.

Economics

the study of how things are made, moved around, and used, how people act, based on the idea that people act rationally and try to get the most value or benefit, and how work and business are run.

Microeconomics

looks at different parts of human behaviour to figure out how people react to changes in prices and why they want certain things at certain prices.

Macroeconomics

looks at the economy as a whole, both nationally and globally.

Scarcity

(The central problem of economics) means that the demand for a good or service is greater than the availability of the good or service.

Circular flow of model

highlights the "flows" within the economy-the flow of economic resources, goods and services, and the flow of money.

Opportunity cost

refers to what you have to give up to buy  what you want in terms of other goods or services.

Three E's of Economics

Economy

Efficiency

Effectiveness

Economy

Getting the right inputs at the lowest cost (or getting a good deal).

Efficiency

Getting the most from the inputs (or getting a lot for the efforts)

Effectiveness

Getting the expected results from the outputs (or doing the right things).

Two Arms of Economics

Positive Economics

Normative economics

Positive economics

deals with various economic phenomena. (What factor)

Normative economics

focuses on what economics should be, this branch of economics talks about the value of the company's fairness. (Should be or Ought to be)

Ceteris paribus

Latin phrase meaning 'with other things that are the same or other things being equal or held constant.

Applications of Ceteris Paribus

The price of meat may rise if more people are willing to purchase it.

Economic system

serves as a regulatory system for controlling different aspects of production and distribution, including capital, labor, land and other physical resources.

Traditional economic system

(oldest model) each member of a community or society has a specific role that contributes to the whole progress of the community.

Command economic system

governments and centralized powers control much of the economic processes, including allocating and distributing resources, goods and services.

Centrally planned economic system

the society creates and dictates economic plans to drive production, investments and allocation of goods, services, and resources.

Market economic system

"free-market system," communities, firms and proprietors act in self- interest to decide how to allocate and distribute resources, what to produce and who to sell to.

Mixed economic system

combine two or more economic practices to form one central system