Ch 1 Class notes What is Economics F 24

Economics

The social science that studies the choices made by individuals, businesses, governments, and societies in response to scarcity and the incentives that influence those choices.

Microeconomics

The study of choices made by individuals and businesses, how those choices interact in markets, and the influence of governments.

Macroeconomics

The study of the performance of national and global economies.

Scarcity

The fundamental economic issue of having seemingly unlimited human wants in a world of limited resources.

Choices

Decisions made by individuals, businesses, and governments in response to scarcity.

Incentives

Factors that motivate individuals and businesses to make certain decisions.

Factors of Production

Resources used to produce goods and services; includes land, labor, capital, and entrepreneurship.

Opportunity Cost

The cost of the next best alternative foregone when making a decision.

Marginal Analysis

The examination of the additional benefits of an activity compared to the additional costs incurred by that same activity.

Positive Economics

The branch of economics that deals with objective analysis and facts, focusing on what is rather than what ought to be.

Normative Economics

The branch of economics that expresses value judgments about economic fairness or what the outcomes of the economy should be.

Economic Models

Simplified theoretical constructs that represent economic processes and relationships, often using ceteris paribus assumptions.

Critical Thinking

The ability to analyze and evaluate an issue in order to form a judgment.

Diversity in Economics Profession

The efforts to increase the representation of women and minorities in the field of economics.

Policy Economics

A branch of economics that provides tools for advising governments and businesses, making personal decisions, and informing public policies.

Taxation

The process through which governments impose financial charges on citizens and businesses to fund public expenditures.