economics
study of peoples choices regarding scarce resources to satisfy unlimited wants and needs
microeconomics
economics in how individuals make decisions and how they interact with our economy
macroeconomics
how the overall economy is performing and measuring the ups and downs of the economy
four economists needs
water, food, clothing, shelter
four factors of production
land, labor, capital, entrepreneurship
land - fp
resources used to produce a product (wood, iron…)
labor - fp
people you hire to complete work for company
capital - fp
manufactured goods used to make other goods
entrepreneurship - fp
efforts of people leading companies and coming up with new products and services
opportunity costs
value of the next best alternative that you must give up (trade off)
explicit opportunity cost
out of pocket exchange (57,000 sticker price for Harvard)
implicit opportunity cost
opportunity to use differently (11,000 for other college - 47,000 you could have had if other option chosen)
positive economics
questions that have definite right answers (positive)
formative economics
answering now something should work (negative)
traditional economy
an economy based on customs and traditions to allocate resources (Nigeria)
market economy
an economy that relies chiefly on the market and forces to allocate goods and resources and to determine prices (New Zealand)
command economy
an economy which production, investment, prices and incomes are determined centrally by a government (North Korea)
mixed economy
an economy that relies on the market forces but has some government involved
