Term 1 Notes

Economics

The study of how individuals, businesses, and organizations use scarce resources to produce and distribute goods and services to meet unlimited needs and wants.

Scarcity

A basic economic problem where resources are limited while human wants are unlimited.

Factors of production

Resources used by businesses to produce goods and services, which include natural resources, labor, capital, and entrepreneurs.

Natural resources

Resources obtained from the earth, such as land, water, and minerals, that are used in the production process.

Labour

The physical and intellectual abilities of people used in the production of goods and services.

Capital

Tools and equipment used in the production process, such as machines and technology.

Entrepreneurs

Individuals who combine resources to create businesses and develop new products or services.

Standard of living

A measure of people's well-being based on the quality and quantity of goods and services consumed.

Microeconomics

The branch of economics that focuses on individual consumers and businesses, examining how they make choices and set prices.

Macroeconomics

The branch of economics that studies the economy as a whole, focusing on aggregate performance indicators such as GDP and unemployment.

Opportunity cost

The value of the next best alternative that must be given up when making a choice.

Economic goods

Goods that are scarce and for which there is a price; they require payment.

Free goods

Resources that are freely available and do not have an associated price, such as air and seawater.

Business cycle

The fluctuations in economic activity characterized by periods of economic expansion and contraction.

Economic activity

Actions that involve the production, distribution, and consumption of goods and services.

Circular flow model

A diagram that illustrates the flow of income and expenditures in an economy, depicting interactions between households, firms, and the government.

Inflation

The rate at which the general level of prices for goods and services rises, eroding purchasing power.

Gross Domestic Product (GDP)

The total value of all finished goods and services produced within a country's borders over a specific time period.

Gross National Income (GNI)

The total income earned by a country's residents, regardless of where that production takes place.

Economic Geography

The study of the location, distribution, and spatial organization of economic activities across the world.

Environment Economics

The branch of economics that analyzes the relationship between economic activity and the environment.

Normative Statements

Statements that are subjective and based on opinions or beliefs, often indicating how things should be.

Positive Statements

Statements that are objective and based on factual information that can be tested or proven.

Trade-offs

The concept of giving up one thing to gain another; often associated with making choices.

Market

A place or arrangement where buyers and sellers come together to exchange goods and services.

Supply and Demand

The relationship between the availability of a good or service and the desire for that good or service.

Consumer Sovereignty

The idea that consumers determine the production of goods and services through their purchasing choices.

Economic Regulation

The use of government authority to control or influence economic activities.

Investment

The act of allocating resources, usually money, in order to generate income or profit.

Barter

A system of exchange where goods and services are traded directly for other goods and services without using money.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning they are available to all without direct payment, such as national defense.

Private Goods

Goods that are produced for profit and can be bought and sold, typically excluding others from use.

Economic Growth

An increase in the production of economic goods and services, compared from one period of time to another.

Developement Economics

The branch of economics that focuses on improving fiscal, economic, and social conditions in low-income countries.