1 | Introduction: What is Economics?
Five factors of production
1. Natural Resources 2. Labor 3. Physical capital 4. Human capital 5. Entrepreneurship
Variable
A measure of something that can take on different values.
Economic Model
A simplified representation of an economic environment, often employing a graph.
Marginal Change
A small, one-unit change in value.
Positive Analysis
Answers the question, "What IS?" or "What WILL be?"
Normative Analysis
Answers the question, "What ought to be?"
Labor
Human effort, including both physical and mental effort, used to produce gods and services.
Ceteris Paribus
Other variables are held fixed. All variables held constant.
Natural Resources
Resources provided by nature and used to produce goods and services.
Entrepreneurship
The effort used to coordinate the 5 factors of production, to produce and sell products.
Human Capital
The knowledge and skills acquired by a worker through eduction and experience and used to produce goods and services.
Factors of production
The resources used to produce goods and services; also known as production inputs or resources.
Scarcity
The resources we use to produce goods and services are limited.
Physical Capital
The stock equipment, machines, structures, and infrastructure that is used to produce goods and services.
Economics
The study of choices when there is scarcity.
Microeconomics
The study of the choices made by house holds, firms, and government and how these choices affect the markets for goods and services.
Macroeconomics
The study of the nation's economy as a whole; focuses on the issues of inflation, unemployment, and economic growth.