Scarcity
The inputs used in the production of things that we want.
The goods and services that we wish to consume as well as the goods that we seek to achieve.
The condition that arises because wants always exceed what can be produced with limited resources.
Wants
The goods and services that we wish to consume as well as the goods that we seek to achieve.
The condition that arises because wants always exceed what can be produced with limited resources.
The inputs used in the production of things that we want.
Resources
The goods and services that we wish to consume as well as the goods that we seek to achieve.
The inputs used in the production of things that we want.
The condition that arises because wants always exceed what can be produced with limited resources.
Natural resources
Education and training.
Free gifts of nature.
Risk taking and organizing other resources.
Labor.
Factories and equipment.
Human resources
Labor.
Factories and equipment.
Education and training.
Free gifts of nature.
Risk taking and organizing other resources.
Physical Capital
Labor.
Factories and equipment.
Free gifts of nature.
Risk taking and organizing other resources.
Education and training.
Human Capital
Risk taking and organizing other resources.
Factories and equipment.
Education and training.
Labor.
Free gifts of nature.
Entrepreneurship
Risk taking and organizing other resources.
Free gifts of nature.
Factories and equipment.
Labor.
Education and training.
The Entrepreneur invests in resources to make profit.
Any activity that results in the conversion of resources into goods and services.
Resources + Technology (how to use the resources) = produce of output (goods and services).
Production
Any activity that results in the conversion of resources into goods and services.
Resources + Technology (how to use the resources) = produce of output (goods and services).
Economics
The study of decision making undertaken by individuals (or households) and by firms. Micro => small. Example: Wages, Prices, Individual Markets.
A social science that studies how people allocate their limited resources to satisfy their unlimited wants. Economics is concerned with how individuals, groups and societies respond to the economic problem of scarcity. Economics are divided in two branches: Micro and Macroeconomics.
The study of the behaviour of the economy as a whole. The big picture. Macro => big. Example: Inflation, National Income, Unemployment.
Microeconomics
A social science that studies how people allocate their limited resources to satisfy their unlimited wants. Economics is concerned with how individuals, groups and societies respond to the economic problem of scarcity. Economics are divided in two branches: Micro and Macroeconomics.
The study of the behaviour of the economy as a whole. The big picture. Macro => big. Example: Inflation, National Income, Unemployment.
The study of decision making undertaken by individuals (or households) and by firms. Micro => small. Example: Wages, Prices, Individual Markets.
Macroeconomics
The study of decision making undertaken by individuals (or households) and by firms. Micro => small. Example: Wages, Prices, Individual Markets.
The study of the behaviour of the economy as a whole. The big picture. Macro => big. Example: Inflation, National Income, Unemployment.
A social science that studies how people allocate their limited resources to satisfy their unlimited wants. Economics is concerned with how individuals, groups and societies respond to the economic problem of scarcity. Economics are divided in two branches: Micro and Macroeconomics.
Rationality Assumption
Are made on the margin (extra).
The assumption that an individual makes decisions based on maximizing his or her own self-interest. People do not intentionally make decisions that would leave them worse off.
The value of the best alternative that must be given up because a choice was made.
Opportunity Cost
The assumption that an individual makes decisions based on maximizing his or her own self-interest. People do not intentionally make decisions that would leave them worse off.
Are made on the margin (extra).
The value of the best alternative that must be given up because a choice was made.
Decisions
Are made on the margin (extra).
The value of the best alternative that must be given up because a choice was made.
The assumption that an individual makes decisions based on maximizing his or her own self-interest. People do not intentionally make decisions that would leave them worse off.
Marginal Benefit
Refers to all extra costs or sacrifices incurred.
Refers to all the extra benefits that one receives in pursuing a course of action, while…
Marginal Cost
Refers to all the extra benefits that one receives in pursuing a course of action, while…
Refers to all extra costs or sacrifices incurred.
Individuals
Respond to incentives (an inducement to take a particular action).
Is not always measured in terms of dollars and cents.
Self-interest
Is not always measured in terms of dollars and cents.
Respond to incentives (an inducement to take a particular action).
Models or Theories
Nothing changes except the factor or factors being studied. Example: What will happen to sales of CDs if their price falls to 5$?
Simplified representations of the real world used as the basis for predictions or explanations. A map and a set of directions are examples of models.
Ceteris Paribus Assumption
Simplified representations of the real world used as the basis for predictions or explanations. A map and a set of directions are examples of models.
Nothing changes except the factor or factors being studied. Example: What will happen to sales of CDs if their price falls to 5$?
Positive Economics
Action plans designed to achieve commonly accepted socioeconomic goals. Goals include full employment, efficiency, economic growth, price stability, equity.
Analysis based on statements that can be tested by observing the facts. Statements about “What is”. It can be verified, tested and compared.
Analysis based on value judgments. Statement about “What ought to be”. It’s an opinion and a judgment.
Normative Economics
Analysis based on statements that can be tested by observing the facts. Statements about “What is”. It can be verified, tested and compared.
Action plans designed to achieve commonly accepted socioeconomic goals. Goals include full employment, efficiency, economic growth, price stability, equity.
Analysis based on value judgments. Statement about “What ought to be”. It’s an opinion and a judgment.
Economic Policies
Action plans designed to achieve commonly accepted socioeconomic goals. Goals include full employment, efficiency, economic growth, price stability, equity.
Analysis based on value judgments. Statement about “What ought to be”. It’s an opinion and a judgment.
Analysis based on statements that can be tested by observing the facts. Statements about “What is”. It can be verified, tested and compared.
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