·
Macroeconomics
Vs. Microeconomics
§
Macroeconomics:
the study of the economy as a whole
“Looking at the big picture”
-
Inflation
-
International
trade
-
Wages
§
Microeconomics:
the study of individual or specific units of the economy
“Looking at the tress but not the
forest”
-
Supplied
and demand
-
Market
structure: monopoly, competition
-
Business
organization: corporations
·
Positive
Economics Vs. Normative Economics
§
Positive
Economics: It attempts to describe the world as is.
“Fact base”
-
It is
very descriptive
-
It is a
derived in what is
-
Collects
and presents facts
v
Example:
Minimum wage causes financial issues.
§
Normative
Economics: it attempts to describe the world should be.
“Opinion base”
v
Example:
The Government should raise the minimum wage up.
·
Needs
Vs. Wants
§
Needs:
basic requirements for survival
v
Example:
food, shelter, water, and clothing
§
Wants:
desire of the citizens
“You don’t need it but you still
want it”
·
Goods
Vs. Services
§
Goods:
tangible ( capital goods or consumer goods)
“Something you can feel or touch”
o
Capital
goods: items use in the creation if other goods
o
Consumer
goods: goods that are intended for final use by the consumer
§
Services:
work that is perform for someone
v
Example:
barber shop, concert, etc…
·
Scarcity
Vs. Shortage
§
Scarcity:
the most fundamental economic problem that all society face
-
How to
satisfy unlimited wants with limited resource
v
Example:
Oil
§
Shortage:
it is where the quantity demanded
greater than the quantity supply
-
Opposite
of the surplus
·
Factors of Production:
1.
Capital: 2 types( Human and Physical)
§
Human capital: knowledge, skills, abilities and
talent
§
Physical capital: tools, machine, factory and
robots
2.
Entrepreneurship ( innovative and risk taker)
“Your boss”
3.
Land: think about the natural resources
“Ingredients of the food you make”
4.
Labor: work force
“Employee”
·
Trade Off: alternatives that we give up
when we choice one course over the action of the other one
·
Opportunity Cost: the next best
alternatives
v
Ex: You’re riding on an airplane when all of a
sudden you had the urge to drink something. You then ask the flight attendant
if she had water and she said no. Then you ask if she had ice tea and once
again she said no. Finally you ask if they ask coca- cola and she said yes. It
wasn’t your first or the next choice.
·
Productive Possibilities Graphs( PPG):
shows alternative ways to use economy resource
“The entire graph”
-
Productive Possibilities curve( PPC)
-
Productive Possibilities frontier( PPF)
·
4 Assignments of a PPG
1.
Two goods
-
Land
-
Labor
-
Capital
-
Entrepreneurship
3.
Fixed technology
4.
Full employment of resource
-
Using our resource how were supposed to
