January 5, 2016
Macroeconomics vs. Microeconomics
- Macroeconomics: the study of the economy as a whole.
- supply and demand
- international trade
- minimum wage
- Microeconomics: the study of individual/specific units of the economy
- market structure
- business organizations
Positive Economics vs. Normative Economics
- Positive economics: attempts to describe the world as is
- very descriptive
- collects present facts
- "what is"
- Normative economics: attempts to prescribe how the world should be
- very prescriptive
- "ought to be"/ "should be" (opinion)
Needs vs. Wants
- Needs: basic requirements for survival
- (food, water, shelter, clothing)
- Wants: are the desires of citizens
Goods vs. Services
- Goods: tangible commodities
- Capital: items used in the creation of other goods.
- Consumer Goods: intended for final use by the consumer
Scarcity vs. Shortage
- Scarcity: the most fundamental economic problem facing all societies
- how to satisfy unlimited wants with limited resources (a choice)
- Shortage: occurs when the quantity demanded is greater than the quantity supplied
Factors of Production
- Land - national resources
- Labor - work force
- Capital
- Human : humans (skills/training)
- Physical : tools (machinery, trucks, buildings)
- Entrepreneurship - innovative/ risk taker
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