Studied by 7 peopleMicroeconomics
Study of small economic units, such as individuals, firms, and markets
Macroeconomics
Study of the large economy as a whole or economic aggregates
Positive statement
What is = Based on facts, Avoids value judgments
Normative Statement
What ought to be = Includes value Judgments
Economics
Study of how individuals and societies deal with Scarcity. (Social Science concerned with efficient use of scarce resources to achieve maximum satisfaction of economic wants.)
Scarcity
Unlimited wants but limited resources (unable to have everything we desire)
Marginal Analysis
Marginal = additional; making decisions based on increments; (You will continue to do something as long as the marginal benefit is greater than the marginal cost)
Trade-offs
ALL the alternatives that we give up when we make a choice
Opportunity Cost
Most desirable alternative given up when you make a choice; Next best thing
Utility
Satisfaction
Allocate
Distribute
Price
Amount Buyer (consumer) pays
Cost
Amount seller pays to produce a good
Consumer goods
Created for direct consumption
Capital goods
Created for indirect consumption
Physical capital
Any human-made resources that is used to create other goods and services
Human capital
Any skill or knowledge gained by a worker through education and experience
Productivity
A measure of efficiency that shows the number of outputs per unit of input
Production Possibilities Curve (PPC)
A model that shows alternative ways that an economy can use its scarce resources; Demonstrates scarcity, trade-offs, opportunity costs, and efficiency
Inefficient/Unemployment
Inside the curve; Not using all resources; Employees are not working on task
Unattainable/Impossible
Outside the curve; Can't have enough stuff to work with; Not enough resources
Efficient
On the curve; Exact resources; Enough resources to use
Constant opportunity cost
Resources are easily adaptable for producing either good; In straight line (not common)
Law of increasing opportunity costs
As you produce more of
Note
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