Unit 1: Economics Introduction

Shalom Akinwunmi
AP Economics
3rd Period


Economics: The branch of knowledge concerned with the production, consumption, and transfer of wealth
Macroeconomics: Looking at the whole economy
Microeconomics: Looking at a small segment of the economy
  • i.e. supply and demand
                                             Image result for macroeconomics vs microeconomics


Positive Economics: Claims that attempt to describe the world as is.
  • It is very descriptive.
  • Ex: Minimum wage laws cause unemployment. Increasing minimum wage means laying people off.
Normative Economics: Claims that attempt to prescribe how the world should be.
  • Ex: The government should raise the minimum wage.

 Wants: Desires of the citizens
  • Wants are always broader than needs
Needs: Basic requirements for survival
Scarcity: Society has insufficient productive resources to fulfill all human wants and needs
  • It is the fundamental economic problem that all societies face
  • Permanent
Shortage: Quantity demand is greater than your quantity supply
  • Temporary
QD > QS = Shortage, prices increase
QS > QD = Surplus, prices decrease
1st Pillar Economic Wisdom:
  • Nothing in our material world can come from nowhere, nor can it be free. Everything is paid for by someone.

 Marginal: Associated with a specific change in the quantity of a good or service.

Goods: Materials that satisfy human wants and provide utility
  • Consumer Good: Tangible commodity produced and purchased to satisfy the buyer. Intended for final use.
  • Ex: Hamburger at Whataburger, Eyeglasses, etc. 
  • Capital Good: Items used in the creation of other good.
  • Ex: Paying for the cheese, lettuce, and tomatoes to build your own hamburger. A la carte.  

 Services: An intangible activity consumed at point of sale. Work performed for someone else.



Comments

  1. UnknownFebruary 4, 2018 at 6:37 AM

    May it be noted that positive economics tend to be based on facts while normative economics tend to be based on opinions.

    ReplyDelete
  2. Kevin M.February 4, 2018 at 9:03 PM

    May it be noted that microeconomics deals with the decision making by individual units and the effects of individual decisions and not just a small segment of the economy because your definition sounds a tad bit ambiguous.

    ReplyDelete

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