Econ Unit 1

Microeconomics
Microeconomics: approaches study of economics from the viewpoint of individual households and firms

Macroeconomics
approaches the study of economics from the viewpoint of the economy as a whole (households, firms, government, the rest of the world)

scarcity
A situation in which unlimited wants exceed the limited resources available to fulfill those wants

Resource
Land Labor Capital

Productive Resource/Factors of Production
Natural resources, human, capital, entreprenuers

Resources are scarce why?
they’re limited

3 Questions for Production
How?- efficiency What?- allocation For whom?-distribution

Analyzing economics looks at what?
GDP, unemployment rate, tax rates

Economists
use theory to show how yesterday’s and today’s economic activities will affect potential future activity- how gvmt. spending today may affect the National Debt

Economic theory
a simplification of an economic reality that is used to make predictions about the real world.

More detail =
more difficult to understand and less useful

Ceteris Parabis
“all other things held constant”

marginal
incremental, additional

comparing the marginal benefit to the marginal cost
economic choice

Opportunity cost
wants are scarce because resources are scarce

marginal benefit
extra benefit from consuming one more unit of a good or service

marginal cost
Extra cost of producing one additional unit of production.

under-utilization
Any point below the Production possibilities curve

curve and points on a curve on the line
nation and business operating efficiently, resources are fixed to qualitative and quantitative, technology

How the society answers the 3 Questions for Production defines their….
economic society

What role does the gov’t play in protecting consumers?