UNIT 1: Intro to Economics.

                                       INTRODUCTION TO ECONOMICS

                             Macro economic vs. Micro economics.

1                     1. Macro economics is the study of the economy as a whole. It deals with topics like:

   -International trade.

   -wage laws.

   -inflation.

      2.  Micro economics is the study of individual or specific unit of the economy. For example:

-          Supply and demand.

-          Market structures.

-          Business organization.

     Positive economics vs. normative economics

1.      Positive economics attempts to describe the world as it’s. It is very descriptive, it collects and present facts and it focuses on the ‘what is’(factual or reliable statements).

2.      Normative economics attempts to prescribe how the world should be. It is very prescriptive in nature (ought to be, should be).

Needs vs. Wants

1.     Needs are basic requirements for survival (food, water, shelter and clothing.)

2.     Wants are desires of citizens.

Goods vs. services

1.      Goods are tangible commodities. There are two types of goods.

-          Consumer goods: these are goods that are intended for final use by the consumer.

-          Capital goods: these are items used in the creation of other goods.

2.      Services mean work that is performed for someone.

                                          Scarcity vs. shortage

1.     Scarcity is the most fundamental economic problem that all societies face. How to satisfy unlimited wants with limited resources.

2.     shortage is when quantity demanded is greater than quantity supplied.

      Factors of production

                   These are resources required to produce goods and services.

1.      Land: natural resources.

2.      Labor: work force.

3.      Capital: human capital (where the skill is learnt from)

4.      Entrepreneurship: innovated and a risk taker.

                                                                         Trade offs

           Alternatives that we give up when we choose one course of action over another (bringing ones lunch vs. buying lunch).

-          Opportunity cost: the next best alternative.

 see video for more explanation : 

h    https://www.youtube.com/watch?v=3ez10ADR_gM