Unit 1 Miscellaneous

Macro vs. Micro

• Macroeconomics - Study of economics as whole {International trade, Supply and Demand, and minimum wage}
• Microeconomics - Study of individual/specific units of economy {Market struc., Business org.}

Positive vs. Normative Economics

• Positive - Tries to describe current world, descriptive; "What is...", Collects and presents facts
• Normative - Tries to prescribe expectations of the world; represented by "ought" and "should"

Needs vs. Wants

• Needs - Basic requirements for survival

1. Food
2. Water
3. Shelter
4. Clothing

• Wants - Desires of citizens

Goods vs. Services

• Goods - Tangible commodities

• Capital goods - Materials for other goods (trucks, machinery, factories) 
• Consumer - Final product to be used by customer
• Services - Work performed for someone

Scarcity vs. Shortage

• Scarcity - Fundamental economic problem society faces; how to satisfy unlimited wants w/ resources.
• Shortage - Quantity demanded > Quantity of supply

4 Factors of Production

1. Land 
2. Labor
3. Capital
• Physical - Tools, buildings, factories, machinery
• Human - Skills, abilities, intellect, talent
4. Entrepreneurship - (Req innovation and risk taking)

Trade-offs - Alt. we give up whenever we choose something over another

Opportunity cost - Next best alt. what to give up
Total revenue - Total $ a firm receives from selling
Fixed cost - Cost resistant to change no matter the amount produced

• Ex: mortgage, rent, salary, insurance

Variable cost - cost rises/falls based on # produced. Ex: Bills

Marginal cost - cost of producing one more unit.