basic economics 1.0

what is microeconomics

the study of how households and firms make decisions and how they interact in markets

what is macroeconomics

the part of economics concerned with large-scale or general economic factors, such as interest rates and national productivity.

scarcity

the limited availability of economic resources relative to society's unlimited demand for goods and services

choice

made as result of scarcity
made between competing alternatives

opportunity cost

the next best alternative foregone when making a choice

efficiency

a quantifiable concept, determined by the ratio of useful output to total input

allocative efficiency

making the best possible use of scarce resources to produce optimum combinations of goods and services, thus minimising resource waste

equity

the concept of fairness in the distribution of resources, which may involve different treatment based on needs or contributions.

economic well-being

relates to the prosperity and quality of life enjoyed by members of an economy

examples of economic well-being

present and future financial security
the ability to meet basic needs
the ability to make economic choices and so achieve personal satisfaction

sustainability

meeting the needs of the present generation without compromising the ability of future generations to meet their needs

change

the world that is studied by economists is always subject to change from one situation to another

interdependence

decisions by consumers, companies, households, worker, and governments generate economic consequences for others

intervention

government involvement in the workings of markets

land

The land, everything that grows on the land or is found under it, the sea, and everything found in or under the sea - includes all natural resources

labour

the human resources used in the production of goods and services
- human work, both physical and intellectual, that contributes to the production of goods and services

capital

refers to the tools and technologies that are used to produce the goods and services we desire

physical capital

stock of manufactured resources such as factories, machinery, roads and tools

human capital

the value of the workforce

infrastructure

the large scale public systems, services and facilities of a country that are necessary for economic activity

infrastructure examples

road, railways, hospitals, schools, airports, ports, electrical and water plants

entrepreneurship

the innovation and creativity applied in the production of goods and services by combining the other three factors of production

trade off

a sacrifice of one thing to get another

free good

something that is so abundant it can easily satisfy our unlimited wants for it - zero, economic costs

what should be produced

decision to prioritise one type of output relative to another

how should it be produced

the choice of production methods
- labour or capital intensive?

for whom should it be produced

How goods will be distributed to society