Chapter 1

• Economics


  The study of efficiently allocating resources to fulfill the needs and wants of people
• Market economy


  • Resources are held in the hands of individuals who have the right to decide what to do with them
  • Individuals both consume resources in the economy and provide resources to the economy
• Microeconomics


  The study of how consumers and businesses make economic decisions
• Law of supply and demand

  If everything else stays the same, the price of a good or service will be high if the demand for it is high and the supply of it is low, and low if the demand for it is low and the supply of it is high
• Invisible hand


  Buyers and sellers will make decisions based upon what's best for them - in their self-interest, and the sum of these interests creates the best result for an economy
• Macroeconomics


  The study of the entire economy and economic effects in the aggregate
• Common areas of study in macroeconomics


  • Inflation
  • Unemployment
  • Economic output
  • Business cycle
  • Fiscal policy
  • Monetary policy
  • International trade
  • Economic systems
• Macroeconomic matters


  Affect business owners like Joe
• Economic growth


  Increasing the economy's ability to produce more goods and services
• Sustainable economic growth


  Economic growth that takes into account the impact on the environment, so that economic growth is sustainable over time
• Resources are limited, and unfettered economic growth can have adverse environmental consequences
• Ways Joe can contribute to sustainable growth

  • Using recycled paper for disposable coffee cups
  • Purchasing organically grown coffee beans
  • Implementing water and energy conservation policies