Intro to Economics

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10 Terms

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Economics

The study of how people allocate their scarce resources to satisfy unlimited wants.

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Microeconomics

The study of the economic problem from an individual point of view.

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Macroeconomics

The study of the economic problem from a large scale or the whole economy.

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Opportunity Cost

Measures the cost of any choice in terms of the next best alternative forgone.

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Economic Problem

People have unlimited wants but there are scarce resources to satisfy them.

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Economics Resources and Rewards

  • land for rent

  • labour for wages

  • capital for interest

  • enterprise for profit

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Ceteris Paribus

All other things being constant.

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Positive Statements

Objective statements dealing with matters of fact or questioning how things really are.

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Normative Statements

Subjective statements based on opinion and values/emotions.

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Characteristics of Market Economy

  • private ownership of property

  • freedom of enterprise and choice

  • self-interest and profit motive

  • consumer sovereignty

  • price mechanism

  • competition

  • limited government involvement