Intro to Economics

• 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