Unit 1; Day 1

Macroeconomics- Study of economy as a whole eg. inflation wage laws and internet trade

Microeconomics- study of individual/specific units of economy eg. supply demand, market structure, business orgs.

Positive Economic- Attempt to describe world as as is "What is"

Normative Economics- Attempt to prescribe how world should be "Ought to be"

Needs- Basic requirement for survival eg. food, water, shelter

Wants- Desires of citizens

Goods- Tangible commodities

            Capital- Used in creation of other goods (machines)

            Consumer- Intended for final use by consumer

Services- Work performed for someone else

Scarcity- Most fundamental problem all societies face. Trying to satisfy unlimited wants w/ limited resources (oil)

Shortage-Quantity demanded is greater than supply

Factors of Production- Land, Labor, Capitol, Entrepreneurship.

Trade Offs- alternatives that we give up whenever we choose one course of action over another

Opportunity Cost- next best alternative

Production Possibility Curve(PPC)- shows alternative way to use community resources

Frontier(PPF)

Graph(PPG)

4 Assumptions of a PPG: Two goods. Fixed resources(land capital, labor, entrepreneurship), fixed tech, full employment of resources

Efficiency- using resources in a  way maximizing production

Allocative Efficiency- products being produced are the ones that a society desires

Productive Efficiency- products being produced in least productive way; reps any point on the PPC

Under Utilization- using fewer resources than an economy is capable of using

3 Types of movement that occur within PPG-

Inside PPC- occurs when resources are unemployed or underemployed (Attainable+Inefficient)

Along PPC-  moving back and forth on the curve (Attainable+Efficient)

Shifts the PPC- shifting of the curve outward or inward(Unattainable)

Video- Production Possibility Graphs