What is economics

Economics

The science of scarcity; the study of how society manages its scarce resources.

Scarcity

The condition of having unlimited wants but limited resources.

Microeconomics

The study of small economic units such as individuals, firms, and markets.

Macroeconomics

The study of the economy as a whole or economic aggregates, including factors like growth and inflation.

Positive Statements

Statements based on facts that avoid value judgments (what is).

Normative Statements

Statements that include value judgments (what ought to be).

Trade-off

The cost of what is given up when making a choice.

Factors of Production

The resources used to produce goods and services; includes land, labor, capital, and entrepreneurship.

Productivity

A measure of efficiency that shows the number of outputs per unit of input.

Price vs. Cost

Price is the amount a buyer pays; cost is the amount a seller spends to produce a good.

Capital Goods

Goods created for indirect consumption, such as machinery and tools.

Consumer Goods

Goods created for direct consumption, like pizza.

Human Capital

Skills or knowledge gained by a worker through education and experience.

Physical Capital

Human-made resources used to create other goods and services.

Investment

The money spent by businesses to improve production.

Theoretical Economics

The development of theories to make generalizations and abstractions.

Policy Economics

The application of economic theories to fix problems or meet economic goals.

Marginal Costs

The additional cost of producing one more unit of a good.

Marginal Benefits

The additional benefit received from the production of one more unit of a good.