Micro

• Positive economics

  Objective statements that can be tested or rejected by referring to available evidence
• Normative economics

  When subjective opinions are expressed
• Factors of Production

  • Land - includes all resources in and on it
  • Labour- work done by people
  • Capital - equipment used in producing goods and services
  • Enterprise - willingness to take a risk to make a profit
• economic goods

  limited availabilty
• free goods

  available at any time, in any chosen amount
• Types of economy

  • command - centrally run by government
  • free - centrally run privately
  • mixed - mix of both
• opportunity cost


  benefits that could have been gained by taking next best decision
• effective demand

  number of people who are willing and able to purchase
• asymmetric information

  one party has more knowledge than the other in a transaction
• PED Equation

  % change in Q / % change in P
• YED Equation

  % change in Q / % change in Y