January 3, 2017

Macroeconomics- The study of economy as a whole

Positive economics: claims attempt to describe the world as is. Very descriptive in nature. Fact-based

Normative economics: claims attempt to describe how the world should be. Opinion based.

Needs vs. Wants

Needs: basic requirements for survival

Wants: desires

Scarcity vs. Shortage

Scarcity: fundamental economic problem that all societies face. How to satisfy unlimited wants with limited resources.

Shortage: quantity demand it exceeds quantity supplied.

Goods vs. Services

Goods: tangible (touchable) commodities. Capital/consumer goods. Capital goods are items used in creation of other goods. Consumer goods are goods intended for use by consumer.

Services: work that is performed for someone. ex: entertainment, getting haircut, etc.

Two Types of Efficiency

• Productive- Products are being produced in the least costly way. Any point on the PPC

• Allocative- Products being produced are the ones most desired by society