1. Economic-study of choice under scarcity
Opportunity cost (OC)- the next best thing you would be doing sacrifice to make that choice
Explicit cost- dollars sacrificed for a choice, like 227$ on SM town tickets (good times)
Implicit cost- value of something for a choice (not directly paid) for example, time
Forgone income- money oyu could have made with that time
OC includes both explicit/implicit (implicit may be a larger fraction)
Scarcity of resources, things that produce g/s (LABOR, CAPITAL, LAND, ENTREPRENSHIP)
Labor- time humans spent producing g/s
Capital- physical capital=physical tools used to create g/s, machinery, buildings, computers, pencils. Human capital= skills/knowledge of brains, long lasting produced by education to help us produce other things. Long lasting, least a year. Capital stock=total capital at a nation disposal
Land=physical space on which production takes place, as well as space where natural resources are found (oil, gold, iron)
Entreprenship-ability to combine the other resources into a productive enterprise
Electricity is not a resource, it’s an input- created by crude oil, a resource.
DS-input is anything used to make a g/s, includes resources but also things made from them (electricity, cement). Resources are special inputs that fall into one of 4 categories, they are ultimate source of everything produce
Macroeconomics-study of behavior of overall economy, different than study of individual households, firms and government (micro)
Positive economics- study of how economy works. Stating a fact, may not be right
DS-statements may seen positive, but indicates a suggestion/method, even putting in vague terms like quality of life
Normative statement- practice of recommending policies to solve problems
Policy differences come from positive disagreements(about what the outcome of policies will be) or differences in value(outcomes are evaluated)
Model-abstract representation of... [continues]
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