Macroeconomics (big picture) VS. Microeconomics (small picture)
-the study of the economy as a whole -the study of individuals or
*international trade specific units of the economy
*wage laws *supply and demand
*inflation's *market structure *business organizations
Positive economics ("What is") VS. Normative economics
-attempt to describe the world as is. -attempts to prescribe how the
(very descriptive) world should be.
-collects:presents facts (very descriptive in nature)
*"Ought to be"
*"Should be"
Needs VS. Wants
-basic requirement for survival -Desires of citizens
(Food,water, shelter, clothing)
Goods VS. Services
-tangible commodities -work performance for someone
-capital goods
*items used in the creation of
other goods
-consumer goods
*goods that are intended for
final use by the consumer
Scarcity VS. Shortage
-most fundamental economic problem -quality demanded >quality supplies
that mall society faces. (QD>QS)
*how to satisfy unlimited wants
with limited resources.
-oil
Factors of Production
1. Land- natural resources
2. Labor-work force
3. Capital- human capital (skills)
-physical capital (tools, machinery,
factories)
4. Entrepreneurship- innovate, risk taker
Factors of Productions
-resources required to produce goods in services
(land, labor, capital's, entrepreneurship)
Trade offs
-alternatives we give up when we choose one course of action over another
(ex. Not going to school, so instead you sleep at home)
(ex. Bring your lunch rather than buying your lunch)
-Opportunity cost: next nest alternatives
(ex. You are at a restaurant you ask for apple juice, but the waitress told you they ran out. Since there is no apple juice you ask for one of your alternative choice which is orange juice, but they do not have orange juice, so finally you ask for water and they are able to provide you with water.)
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