Study of small economic units, such as individuals, firms, and markets
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Macroeconomics
Study of the large economy as a whole or economic aggregates
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Positive statement
What is = Based on facts, Avoids value judgments
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Normative Statement
What ought to be = Includes value Judgments
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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.)
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Scarcity
Unlimited wants but limited resources (unable to have everything we desire)
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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)
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Trade-offs
ALL the alternatives that we give up when we make a choice
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Opportunity Cost
Most desirable alternative given up when you make a choice; Next best thing
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Utility
Satisfaction
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Allocate
Distribute
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Price
Amount Buyer (consumer) pays
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Cost
Amount seller pays to produce a good
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Consumer goods
Created for direct consumption
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Capital goods
Created for indirect consumption
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Physical capital
Any human-made resources that is used to create other goods and services
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Human capital
Any skill or knowledge gained by a worker through education and experience
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Productivity
A measure of efficiency that shows the number of outputs per unit of input
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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
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Inefficient/Unemployment
Inside the curve; Not using all resources; Employees are not working on task
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Unattainable/Impossible
Outside the curve; Can't have enough stuff to work with; Not enough resources
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Efficient
On the curve; Exact resources; Enough resources to use
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Constant opportunity cost
Resources are easily adaptable for producing either good; In straight line (not common)
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