1.0 Scarcity

Economics

The science of scarcity, focusing on the efficient use of limited resources to satisfy unlimited wants.

Scarcity

The condition of having unlimited wants but limited resources, necessitating choices.

Microeconomics

The study of small economic units such as individuals, firms, and markets.

Macroeconomics

The study of the economy as a whole or economic aggregates.

Theoretical Economics

The use of the scientific method to develop generalized theories about economic behavior.

Policy Economics

The application of economic theories to solve problems or achieve economic goals.

Positive Statements

Economic statements based on facts that avoid value judgments (what is).

Normative Statements

Economic statements that include value judgments (what ought to be).

Key Economic Assumption 1

Society has unlimited wants and limited resources (scarcity).

Key Economic Assumption 2

Choices must be made due to scarcity, and every choice has a cost (trade-off).

Key Economic Assumption 3

Individuals aim to maximize satisfaction and act in self-interest.

Key Economic Assumption 4

Decisions are made by comparing marginal costs and marginal benefits.

Key Economic Assumption 5

Real-life situations can be analyzed through simplified models and graphs.

Marginal Analysis

Decision-making based on evaluating additional benefits and costs.

Utility

The satisfaction derived from consuming goods and services.

Marginal

Referring to additional or incremental changes.

Allocate

To distribute resources or goods.

Price

The amount a buyer pays for a good or service.

Cost

The amount a seller incurs to produce a good.

Investment

Money spent by businesses to enhance production capabilities.

Consumer Goods

Goods created for direct consumption by consumers.

Capital Goods

Goods created for indirect consumption, used to produce other goods.

Factors of Production

The resources classified as land, labor, capital, and entrepreneurship.

Land

All natural resources used in the production of goods and services.

Labor

The effort a person devotes to a task for which they are compensated.

Physical Capital

Human-made resources used to create other goods and services.

Human Capital

Skills or knowledge gained by workers through education and experience.

Entrepreneurship

The initiative taken by leaders to combine resources and create goods and services.

Entrepreneurs

Individuals who innovate, take risks, and drive economic activity.

Profit

The difference between revenue and cost.

Productivity

A measure of efficiency showing the number of outputs per unit of input.