Unit 1 - Economics Introduction
Macroeconomics vs Microeconomics
Macro-The study of the economy as a whole (Big Picture)
-Ex:Supply+Demand, International Trade
Micro-Study of individual or specific units
-Ex:Market Structure, Business organization
Positive Economics vs Normative Economics
Positive-Attempts to describe the world as it is very descriptive
-Ex: collects and presents facts "What is"
Normative-Attempts to prescribe how the world should be very prescriptive
-Ex:"Ought to be" "Should be" - Opinion
Needs vs Wants
Needs-basic requirements for survival
-Ex: (H2O, Food, Shelter, Clothing)
Wants- Desires of Citizens
-Ex:what you wish for
Goods vs Services
Goods-Tangible commodities (Bought,Sold,or Produced)
-Ex: Capital goods-items used in the creation of other goods (Trucks,Factory Machines)
consumer goods-Goods that are intended for final use by the consumer
Services-Work that is performed for someone
-Ex:(Haircut,School, Concert)
Scarcity vs Shortage
Scarcity-the most fundamental economic problems facing all societies
-Ex:How to satisfy unlimited wants with limited resources, involves a choice (oil)
Shortage-Quantity Demanded> Quantity Supply
Factors of Production
Factors of Production-Resources required to produce goods and services
1.Land-Natural resources
2.Labor-Workforce
3.Capital -Human:(Skills)[where/how]-(College/training) Physical:(Tools,Machinery,Buildings,Trucks)
4.Entrepreneurship-Innovative and risktaker
For Land, the natural resource could be anything, for example the resource could be steel or aluminium, because "Land" is a building block for all the other factors.
ReplyDeleteFor shortage, be sure to know that it is just that there is more demand than there is supply of the product or service.
ReplyDelete