Notes January 7th, 2015
Macroeconomics- the study of the whole economics
Microeconomics- the study of parts of the economy (small impacting organizations in making decisions on the allocation of limited resource.)

Positive economic (fact)- claims that a attempt to describe the world as is. Very descriptive
Ex. Minimum wage laws causes unemployment
 Normative economic (opinion)- claims that attempt to prescribe what the world should be
Ex, the government should raise the minimum wage.

Needs- basic requirements for survival
Wants- desires of citizens, much broader then your needs.

Scarcity- the most fundamental economic problem that all societies face. Satisfy unlimited wants with unlimited needs.
Shortage- situations when quantity demand is greater then quantity supply Goods- tangible materials o Consumer goods- that are intended for final use by the consumer (candy bars, vehicles etc)
 o Capital goods- items used in the creation of another good Services- work that is preformed (janitor, stripper etc)

 Factors of production
1. Land- natural resources
 2. Labor- work force
3. Capital
  Human- knowledge and skills gained through work and education
  Physical- human made objects used to create other goods and services ( ex. Buildings, tools. Machinery etc)
 4. Entrepreneurship
  Innovation
 Risk taker

 Trade-offs – alternatives that we give up whenever we choose one course of action over another Opportunity cost- the most desirable alternative given up by making a decision (like not getting your first choice) 
“Guns or butter”- military or agriculture ( the government spends mostly on military)

 Production possibility graph (PPC or PPF)- shows alternative ways to use resources
 Always want to be on the curve
 Point D is underutilization and attainable but inefficient o Can be caused by: recessions, war/famine, underemployment, population loss, or unemployment resources
Point E is unattainable o Can be caused by: economic path, technology, or discovered new resources Point B is efficient and attainable
Point A and C are also both efficient but the production of different items are not evenly produced. Population possibilities graphs 1 key assumptions:
 1) Two goods are produced
2) Fall employment
 3) Fixed resources (land, labor, capital)
 4) Fixed state of technology
 5) No international trade