Macroeconomics vs Microeconomics
Macroeconomics- The study of the economy as a whole, in other words you are looking at "the big picture".
Microeconomics- The study of individual or specific units of the economy.
Positive economics vs normative Economics
Positive Economics- claims that attempt to describe the world as is ( very descriptive also collects and presents facts).
Normative Economics- claims that attempt to prescribe how the world should be ( opinion based).
Needs vs Wants Needs- basic requirements for survival
Want- Desires
Scarcity’s vs shortages
Scarcity- fundamental economic problems that all of society faces. ( how to satisfy unlimited wants with limited resources)
Shortages- situation in which quantity demanded is greater than quantity supply.
Goods vs services
Tangible (touch/ feel) commodities
Services- work that is performed for someone else
01/04/17
4 Factors of Production
Consumer Goods- goods that are intend to be used by the consumer
Capital Goods- items used in the creation of other goods
1. Land- natural resources
2. Labor- work exerted
3. Capital-
- Human Capital- people acquire skills knowledge through experience and education.
- Physical Capital- money, tools, buildings,. Machines, etc.
4. Entrepreneurship- involves risk taking combines the factors of production in order to become successful.
Trade-offs- alternative that we sacrifice when we make a decision ex: A farmer who plans tomatoes cannot plant corn in the same spot
Opportunity Costs- next best alternative in other words, what do you give up to get something.
Guns or Butter- refers to trade off that the government faces when choosing whether to produce more or less military goods or consumer goods.
Thinking at the margines- deciding whether to add or subtract one additional unit of some resource .
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