E- Basic Economics Concepts

Microeconomics

• Study of individuals and their economic decisions

• Studies why people make the economic decisions they do, for example: why someone chooses to buy a pair of shoes or why a store decides to sell only pink roses.

Macroeconomics

• the design and function of the economy as a whole

• Focused on the institutions, policies, and outcomes of large-scale economies, such as those of regional, national, or global governments and organizations

Economics

• the study of how goods and services are produced, distributed, and consumed in an environment of scarcity.

Scarcity

• The gap between resources you have available and what you'd want is called scarcity. All humans operate in a world where time, money, and natural resources are limited.

• Scarcest resource on earth is time.

Specialization

• the process where individuals or groups focus on a specific task or area of production to increase efficiency and output.

Price is determine by 2 factors: Supply

• Supply is the amount being made by producers

Price is determine by 2 factors: Demand

• the amount being asked for by consumers

Law of Demand

• As price increases, quantity demanded decreases

• Consumers hurt by higher opportunity costs

Law of Supply

• As price increases, quantity supplied increases

• Producers benefit from the increased price

Cost-benefit Analysis

Opportunity Cost

• It asks the question: what did an individual not do in order to complete the activity they are currently doing?

• less about money and more about general use of resources