mismatch b/w unlimted needs and limited means to satisfy them
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Resources
things that can be used to produce a finished good or service
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3 economic questions?
What to produce, How to produce, for whom to produce
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Economic Systems
means by which govts organise and distribute resources, thus solving the 3 questions. $ such systems- Traditional, Market, Mixed, Command
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→ Normative
________- Based on opinions and ethics, is subjective (e.g; Women should be granted paid period l leaves)
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Scarcity gives rise to 3 economic questions (concerning distribution of resources)
What to produce, How to produce, for whom to produce
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→ Traditional
based on barter system, influenced by beliefs and rituals, eventually evolves into consumer economy
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→ Command economy
govt makes all economic decsisions
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→ Market Economy
no govt control, driven by consumers
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→ Mixed
aspects of both market and consumer economy
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→ Land
Natural resources used in production (farming land, minerals, rocks)
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→ Labour
Human input/the workforce (Artist, Nurse, Mason, Carpenter, Teacher)
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→ 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
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Opportunity cost
cost of next best alternative
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Production possibilities frontier
A graph to represent the possible combinations of two goods being produced when all resources are used efficently
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2 Major fields within economics?
Macroeconomics- Study of economy as a whole
Microeconomics- Study of how Individual actors make decisions about scarce resources
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Positive and normative statements in econ?
Normative- Based on opinions and ethics, is subjective. Positive- Based on facts and observations, can be testes empirically
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Factors of production
inputs used in production of goods and services; Land, Labour, Capital, Entreprenuership
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opportunity cost
cost of next best alternative
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Production possibilities frontier
graph to represent the possible combinations of two goods being produced when all resources are used efficently.
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