Economics: the study of how people make decisions. how do people use their scarce resources to satisfy their unlimited wants?

Macroeconomics: the study of the economy as a whole (aggregate) - the big picture.

Microeconomics: the study of economics at the level of the individual - the small details.

The basic economic problem: there are limited resources but unlimited wants.

Scarcity: you cannot get all you want at no cost or zero price

Economic good: a good which there is scarcity. it costs something.

Free good: a good for which there is no scarcity.

Economic bad: any item which people would be willing to pay less for

4 economic resources: labor (paid in wages), capital (paid in interest), land (paid in rent), and entrepreneurship (paid in profit)

Rational self-interest: people will choose what is in their best interest, or choose whatever brings them the most benefit

Positive analysis: research or analysis based on concrete fact.

Normative analysis: research which involves opinions, or tells what should be

Fallacy of composition: “something that is good for one is good for all”

Association as causation: “one event causes the other if they are related”. also known as causation vs correlation

Ceteris Paribus: in an experiment, everything but the quality being observed must remain constant