Macroeconomics/ Microeconomics
Macroeconomics -the
study of the major components of the economy.
-
Ex. Inflation, GDP, International trade
Micro economics-Study
of how households and firms make decisions and how they interact in markets
-
ex. supply and demand, market structures
Positive economics vs normative economics
Positive economics- Claims
that attempt to describe the world as is, it is very descriptive (fact based)
-
Ex. Minimum wage laws causes unemployment
Normative economics- claims
that attempt to prescribe how the world should be, very prescriptive in nature (opinion
based)
-
Ex. The government SHOULD raise the minimum
wage.
Needs vs Wants
Needs- basic
requirements for survival -Ex. Food,
water, shelter
Wants- desires of
citizens, broader than needs
Scarcity vs Shortage
Scarcity- most
fundamental economic problem facing all societies. Satisfying unlimited wants and
needs with limited resources.
Shortage- Quantity
demanded is greater than quantity supplied (temporary)
Goods vs Services
Goods- tangible
commodities. 2 types- consumer goods and capital goods
-
Consumer- goods intended for final use by
consumer
-
Capital goods-
items used in the creation of other goods ex. Factor, machinery, trucks
Services- work that is performed for someone else
Factors of production
1. land-natural resources
2. Labor- work
force
3. capital- human-knowledge
and skills /physical- human made objects used to create other goods/services
4. entrepreneurship-
innovator/risk taker
Tradeoffs
Opportunity cost-
the most desirable alternative given up by making a decision
Production possibility
graphs- shows alternative ways to use resources.
Point e- (outside the curve) – economic growth, technology,
new resources
Productive efficiency-
producing at lowest cost and allocating resources efficiently, full employment
of resources. (any point on the curb)
Allocative efficiency-
where to produce on the curb
Its highly interesting how Macroeconomics and Microeconomics are closely alike, a major component of the difference between the two is the fact that Macroeconomics deals on a larger scale and effects the majority of the economy.
ReplyDeleteyour blog details the fine line between micro and macro within economics. it could be a bit more structured but overall contains enough notes to be viable
ReplyDeleteI like that you used the graph in order represent what is inefficient, efficient, and unattainable. You could improve your blog by adding about the aspects of supply and demand and their determinants.
ReplyDeleteYour explanation of this unit is very well done and highly informative on what the unit is about
ReplyDelete