Social Science: the study of society and how people collectively behave
and influence the world around us
Economics: how to allocate scarce resources to satisfy
man’s unlimited needs and wants
Macroeconomics: deals with the overall performance of national
and international economies
Microeconomics: deals with the behavior of the individual units of the
economic system (e.g consumer, producer,
resources owners).
Scarcity: IS THE CONDITION OF RESOURCE INSUFFICIENCY TO SATISFY ALL THE NEEDS AND WANTS OF A POPULATION.
Shortage: can be replenished; artificial limitation brought about by the market situation
Opportunity Cost: the value of the best-foregone alternative
Trade-off: when you choose one thing which causes you to have to give up, or sacrifice, another
Net Benefit: determined by summing all benefits and subtracting the sum of all costs of a project
Net Loss: when total expenses exceed the income or revenue produced for a given period of time.
Factors of Production:
Land
Labor
Capital
Entrepreneurship
3 Questions to be Answered:
What to produce?
How to produce?
For whom to produce?
Economic Systems:
Traditional Economy: decisions are based on traditions and practices upheld over the years and passed on from generation to generation.
Command Economy: a central government makes all economic decisions
Market Economy: producers and consumers decide what, how, and forwhom to produce collectively guided by the price system
Mixed Economy: combination of the three basic types of economic systems. government is involved in planning the use of some resources and can exert control over businesses in the private sector
Gross National Income: the market value of final products produced by the resources of the economy in a given period
Gross Domestic Product: is the market value of final products produced by domestic resources