January 3, 2017

Basic Concept of Economics

1. Macroeconomics vs. Microeconomics 
2. Positive economics vs. Normative economics 
3. Needs vs. Wants 
4. Scarcity vs. Shortage 
5. Goods vs. Wants (Capital & Consumer) 

What is Macroeconomics?

• It is the study of the economy as a whole 

• Inflation
• Minimum wage 
• International trade 

What is Microeconomics?

• It is the study of individual or specific units of the economy.
• How households & firms make decisions & how they interact in markets. 
• "Trees but not forest"

What is Positive Economics?

• It  is the attempt to describe the world as is.
  
• Very descriptive 
• Collects & Presents facts 

What is Normative Economics?

• It is the attempt to prescribe how the world should be. 
• Opinion based  

What is Needs?

• It is the basic requirements for survival.
• Water, food, and shelter.

What is Wants?

• It is simply desires.

What is Scarcity?

• It is the most fundament
  
  al economic problem facing all societies. 
• Unlimited want but limited resources 
• Permanent 

What is Shortage?

• It is the quantity demanded exceeds quantity supplied.
• Temporary

What is Goods?

• It is tangible commodity (touch/hold/feel)
• Can be bought, sold, traded, and produced.
• Capital goods- Items used in the creation of other goods.
• Consumer goods- Intended for final use.

What is Services? 

• It is work that is performed for someone.