Introduction to Economics Notes

Intro To Econ notes * Lesson 1.00: Basic Economic Concepts * Macroeconomics- the study of our national and global economy * To determine how to allocate our nation’s scarce resources and use them more efficiently * Lesson 1.02: Economic Basics * 3 basic economic questions * What goods will be produced? * How will resources be used in the production process? * Who will receive the goods? * Ceteris paribus= all other things being equal * Command economy- government makes all economic decisions about how the factors of production are used * No incentive to take risks b/c government controls economy * Market economy- forces of supply and demand determine how economic questions will be answered * Individuals own the factors of production and have the freedom to buy and sell resources in return for profit or other incentives * Price acts as a rationer of goods and services and determinant of what will be produced * Traditional economy- an economy in which economic decisions are based on traditions * Factors of production- land, labor, capital, entrepreneurial ability * Resources- land, labor, capital, entrepreneurial ability Resource | Definition | Example | Land | Productive resources that come from nature | Water, trees, minerals | Labor | Human resources | Physical effort of people, knowledge and skills of people | Capital | Person-produced tools of the trade | Buildings, equipment, tools, and machines | Entrepreneurship | intelligence, imagination, and ability to take the risks that are needed to start up and maintain a business | businessmen |

* Lesson 1.03: Scarcity and Opportunity Costs * Scarcity and Opportunity Cost * All economic goods are scarce * Scarcitymakes us make decisions and trade-offsopportunity cost * Trade-off- cost of choice you make * Opportunity cost-