CH1 Introduction to Economics

• Define Scarcity

  Scarcity is our inability to satisfy all our wants and needs
• Define Wants

  Wants are our desires for goods and services, these are unlimited
• Define Needs

  Needs are necessities essential for our survival
• Define Demand

  Demand is the desire to purchase and the ability to do so, ie the purchasing power
• Define Economics

  Economics is a social science that studies the choices that individuals, businesses, governments and entire societies make as they cope with scarcity and the incentives that influence and reconcile those choices
• Define Microeconomics

  Microeconomics focuses on the individual participants in the economy: producers, workers, employers and consumers. Focuses on specific markets.
• Define Macroeconomics

  Macroeconomics is the study of the effects on the national and global economy of the choices that individuals, businesses and governments make.
• Macro/Micro: Price of a single product

  Micro
• Macro/Micro: Changes in the price of a product

  Micro
• Macro/Micro: Decisions of individual consumers

  Micro
• Macro/Micro: The Consumer Price Index

  Macro
• Macro/Micro: Inflation

  Macro
• Macro/Micro: Total output of all products & Services in the economy

  Macro
• List the factors of production

  Natural Resources, labour, capital, entrepreneurship
• What are the primary factors of production

  Natural Resources, Labour
• What are the secondary factors of production?

  Capital, Entrepreneurship
• Define a trade-off

  Giving up one thing in order to get something else
• Define opportunity cost

  The highest valued alternative given up