Economics
The study of how people in societies make decisions dealing with scarcity
Macro economics
Study of the large economy as a whole
Micro economics
Study of small economic units, such as individuals, firms, and markets
Positive statements
Based on facts and data
Normative statements
Based on value judgments
Market
Individual buyers and sellers make economic decisions
Command
A century planned government makes economic decisions
Mixed
Combines elements of market and command economies
Trade off
All the alternatives that we give up when we make a choice
Opportunity cost
Most desirable alternative given up when you make a choice
Four factors of production
Land, labor, capital, and entrepreneurship
Land
All natural resources that are used to produce goods and services
Labor
After a person devote to a task for which that person is paid
Physical capital
Any human made resource that is used to create other goods and services
Human capital
Any skills or knowledge gained by workers through education and experience
Entrepreneurship
Leadership and decision-making to combine the other factors of production to create goods and services
Absolute advantage
The producer that can produce the most output or requires the least amount of inputs
Comparative advantage
The producer with the lowest opportunity cost
Output
Other goes over
Input
Other goes under
