1. Macroeconomics vs. Microeconomics
Macroeconomics- is the study of the economy as a whole ( Big picture).
Ex: International trade, inflation.
Ex: Supply, demand, market structure, business organizations, etc.
2. Positive economics vs. Normative economics
Positive economics- are claims that attempt to describe the world as is. It is very descriptive, collects and presents facts. Fact based.
Normative economics- are claims that attempt to prescribe how the world should be. Opinion based.
3. Needs vs. Wants
Needs- basic requirements for survival.
Wants- desires.
4. Scarcity vs. Shortage
Scarcity- is the fundamental economic problem that all societies face. Basicically it is how to satisfyy unlimited wants with limited resources.
Rx: Oil.
Shortage- this is a situation where quantity demanded is greater than quantity supplied( QD>QS).
5. Goods vs. Services
Goods- tangible commodities.
-Consumer goods: goods that are intended for final use by the consumer.
Ex: A car, a cookies, juice, etc.
-Capital goods: items used in the creation of other goods.
Ex: the car engine & tires,the cookies flour & sugar.
Services- work that is performed for someone.
Factors of Production
3. Capital involves two types:
a) Human capital: where people aqcuire skill and knowledge through experience and education.
b) Physical capital : can be money tools, buildings & machines.
4. Entrepreneurship- it involves risk taking. The entrepreneurs combine the factors of production in order to become successful.
Trade-offs
Is an alternative that we we sacrifice when we make a decision.
Oppurtunity cost
Ex: First a red bull > coffee> water
Guns or Butter
Refer to trade-offs that the gov't face, when choosing whether to produce more or less military goods or consumer goods.
Thinking at the Margins
Deciding whether to add or subtract one additional unit of some resource.
Resources:
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