Introductory Economics

Economics

study of effective allocation of resources

Scarcity

mismatch b/w unlimted needs and limited means to satisfy them

Resources

things that can be used to produce a finished good or service

3 economic questions?

What to produce, How to produce, for whom to produce

Economic Systems

means by which govts organise and distribute resources, thus solving the 3 questions. $ such systems- Traditional, Market, Mixed, Command

→ Normative

________- Based on opinions and ethics, is subjective (e.g; Women should be granted paid period l leaves)

Scarcity gives rise to 3 economic questions (concerning distribution of resources)

What to produce, How to produce, for whom to produce

→ Traditional

based on barter system, influenced by beliefs and rituals, eventually evolves into consumer economy

→ Command economy

govt makes all economic decsisions

→ Market Economy

no govt control, driven by consumers

→ Mixed

aspects of both market and consumer economy

→ Land

Natural resources used in production (farming land, minerals, rocks)

→ Labour

Human input/the workforce (Artist, Nurse, Mason, Carpenter, Teacher)

→ Capital

Assets to be used in prodcution of other stuff (tractor used for farming, cloth used for making garments i.e, tangible human-made objects {physical capital} or Human knowldege {also known as human capital} such as factory equipment

Opportunity cost

cost of next best alternative

Production possibilities frontier

A graph to represent the possible combinations of two goods being produced when all resources are used efficently

2 Major fields within economics?

Macroeconomics- Study of economy as a whole

Microeconomics- Study of how Individual actors make decisions about scarce resources

Positive and normative statements in econ?

Normative- Based on opinions and ethics, is subjective. Positive- Based on facts and observations, can be testes empirically

Factors of production

inputs used in production of goods and services; Land, Labour, Capital, Entreprenuership

opportunity cost

cost of next best alternative

Production possibilities frontier

graph to represent the possible combinations of two goods being produced when all resources are used efficently.