introduction to economics

Economics

The social science that studies how individuals, governments, firms, and nations make choices on allocating scarce resources to satisfy their unlimited wants.

Scarcity

The basic economic problem that arises because people have unlimited wants but resources are limited.

Factors of Production

Resources used in the production of goods, including land, labor, capital, and entrepreneurship.

Land

Natural resources such as water, minerals, and land itself.

Labor

The physical and mental effort provided by people.

Capital

Man-made goods used in the production of other goods, such as machinery and factories.

Entrepreneurship

The skill and risk-taking required to combine land, labor, and capital to produce goods and services.

Microeconomics

The branch of economics that focuses on the behavior of individual consumers and firms.

Macroeconomics

The branch of economics that looks at the economy as a whole, focusing on aggregate variables such as GDP and inflation.

Opportunity Cost

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

Traditional Economy

An economic system based on customs, beliefs, and traditions.

Command Economy

An economic system where the government or a central authority determines what goods are produced and how they are distributed.

Market Economy

An economic system where decisions are made by individuals and firms through the interaction of supply and demand.

Mixed Economy

An economic system that combines elements of both market and command economies.