Economic Foundations (copy)

Topic 1: Economic Activity Topic 2: The Factors of Production Topic 3: Making Choices

Economics

The study of how people, corporations, and the government make decisions to satisfy people's needs and wants.

Macroeconomics

The study of economics about the general overview of the economy, focusing on growth, unemployment, and inflation.

Microeconomics

The study of individuals and companies interacting to support the supply and demand of resources.

Scarcity and Choice

The challenge of having unlimited wants with limited resources.

Rational Behavior

The concept that individuals aim to maximize satisfaction, while companies aim to maximize profits.

Marginal Analysis

Evaluating the difference between extra benefits and extra costs.

Economic Growth

Increasing goods and services compared to the population.

Full Employment

Ensuring all willing individuals are employed.

Economic Efficiency

Maximizing output from limited resources and reducing waste.

Price Stability

Maintaining stable prices to avoid inflation or deflation.

Economic Freedom

Allowing individuals to spend, produce, and work as they choose.

Equitable Distribution of Income

Striving for minimal inequality to ensure a good standard of living for all.

Economic Security

Protecting individuals from unemployment or financial crises.

Balance of Trade

Achieving a balance between imports and exports to minimize surpluses or deficits.

Needs vs Wants

Needs are necessities for survival, while wants are desires for pleasure.

Purpose

Economic activity aims to produce goods and fulfill people's needs and wants.

Economic Decision

Involves determining what to produce, how to produce it efficiently, and who will benefit.

Consumers

Individuals who purchase goods or services.

Producers

Entities that create or provide goods and services.

Government

Oversees interactions between consumers and producers and collects taxes.

Economic Resource

Resources that determine what, how, and for whom goods or services are produced.

Resources Used in Production

Factors like money and time that influence production methods.

Land

Available land impacting production decisions.

Labor

Human effort put into work.

Capital

Money available for investment in production.

Enterprise

Skills used to optimize land, labor, and capital.

Choices

Decisions weighed by potential costs and benefits.

Costs

Sacrifices made to reach a decision.

Benefits

Gains from making a decision.

Opportunity Cost

The value of the next best alternative foregone when a decision is made.

Law of Increasing Opportunity Act

When the production of a good increases, the opportunity costs of that good for an additional unit rise.

Normative Econ

The things a government should do to reach a goal.

Policy Econ

Developing a policy to a economic problem.

Positive Econ

Facts describing economic phenomena’s.

Theoretical Econ

Models made based on logic and assumptions, like the Keynesian theory.

Inductive Econ

Researching patterns to make laws or theories.

Deductive Econ

Using theories to make specific conclusions.

Market Economy

Prices are determined by supply and demand, there is minimum government intervention (USA, Singapore).

Command Economy

The government has a large control over what and how things are being made (North Korea).

Mixed Economy

Mix of both command and market economies, both supply and demand play a role (UK, France).