Chapters 1-2 Scarcity , factors of Production
1.Macroeconomics Vs Microeconomics
Macroeconomics-study of economy as a whole, examples are : supply and demand, international trade, minimum wage. Microeconomics- study of individual or specific units of economy, examples are Market structure
2. Positive Vs Normative economics
Positive- attempts to describe the world as is and very descriptive , collects and presents facts. Normative Attempts to prescribe how the world should be and is opinion based
3. Needs Vs Wants
Needs- Basic requirements for survival (food, water, shelter, and clothes). While wants are just the desire of citizens.
4. Goods Vs services
Goods- tangible commodities meaning it can be bought or produced there are 2 types of goods. Capital Goods- items used in the creation of other. Consumer Goods- goods that are intended for final use by the consumer. Services- work that is performed for someone
Scarcity vs Shortages
Scarcity- is how to satisfy unlimited wants with limited resources this always creates a choice. Shortages Quantity demanded is greater than quantity supplied.
Factors of Production
- Natural resources
- Labor- Workforce
- Capital 2 types Human capital ( skills, college, training) and Physical Capital (Tools, Machines)
- Entrepreneurship ( you must be Innovative and a risk taker to make it work )
January 6th, 2015
Chapters 1-2 Scarcity, factors of Productions
1.Tradeoffs -The alternative that we give up when we choose one course of action over another
2. Opportunity Cost- Is a form of trade offs but the next best alternative
3. Production Possibilities Curve (PPC) Frontier (PPF) Graph (PPG) -Shows alternative ways to use an economies resources
4 Assumptions of PPG
- Two Goods
- Fixed Resources
- Fixed Technology
- Full employment of resources
Allocative Efficiency-The products that are being produced are the ones that are being used by society.
Productive Efficiency- products are being produced in the least costly way.
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