Unit 1 notes

Needs

- basic requirements for survival
ex. food, water, shelter

Wants
-broad requirements
ex. cell phone, TV, jewelry







Scarcity

- fundamental economic problem all societies face

- satisfying unlimited wants with limited resources

ex. water, oil

Shortage

-a situation where quantity demanded is greater than quantity supply

ex. go in store for juice, not there, get it another day

Goods

-tangible commodity, goods are bought, sold, traded and produced.

Consumer goods

- goods that are intended for final use of he consumer

ex. eating the chocolate bar

Capital goods

-items used in the creation of other goods, such as factory machinery and trucks.

Services

- work that is preformed for some one else

factors of production 

1. land

2. labor

3. capital

4. entrepreneurship

1. Land - natural resources

2. labor- work force

3. human capital- knowledge and skills a worker gains though education and experience

4. physical capital- human made objects used to create other goods and services

ex. buildings and tools

entrepreneurship- having a product, being a risk taker.

Macroeconomics Vs Microeconomics 

 

Macroeconomics

- The study of the major components of the economy

ex. inflation, supply and demand, wages and GDP

Microeconomics

- The study of house holds and firms make decisions in how they interact with the market

Positive Economics

- claims that attempt to describe the world as it is

-very descriptive

ex. minimum wage laws causes unemployment

Normative Economics

- claims that the attempt to predict prescribe how the world should be

-opinion based

ex. minimum wage increases

Trade Offs

- alternatives that we give up when we choose one course of action over another

Opportunity Cost 

- we are choosing our next best alternative

Production possibility curve

- shows the most that society can produce if it uses every available resource to the best of its ability