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Economics is the study of how resources are allocated to meet the needs and wants of individuals, governments and firms within an economy
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Economics is considered a social science since it examines the diverse social behaviour of individuals and societies in relation to the allocation of scarce resources
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Microeconomics: concerned with the behaviour of individuals and firms
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Macroeconomics: examines the operations of the economy as a whole
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Scarcity refers to the idea of finite resources of an economy relative to the unlimited needs and wants of individuals and societies. Therefore, scarcity means that there is a shortage of resources in the economy at any moment in time.
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Diagramatic representations of the maximum combination of two products that an economy can produce when all its resources are used efficiently, per time period
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Full employment: all factors of production are fully utilized. There are no unemployed resources
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Efficiency: all resources are put to their best use and there is no wastage in the production process
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Assumptions of the model: fixed production possibilities, scarcity, constant state of technology, efficiency
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The study of the processes, practices and principles in relation to the discipline of economics as a social science through the use of models, theories and assumptions that underlie economic reasoning
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positive economics: the study of economics that is provable, that is factual statements about the economy or statements of “what is” rather than “what ought to be”
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normative economics: Normative economics considers peoples varying opinions and beliefs about what should be. These claims are subjective and expressed as value judgements
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Wellbeing
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Interdependence
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Scarcity
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Efficiency
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Choice
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Intervention
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Change
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Equity
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Sustainability
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The costs of an economic decision measured in terms of the best alternative choice foregone
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Example: the opportunity cost of studying ib economics is another's individual and societies subject you could be studying instead
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Basic economic problem: how best to allocate scarce resources to meet the unlimited wants and needs of individuals
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Land: The natural resources used in production
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Labour: The human resources required for the production process
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Capital: Non-natural products used in the production process, such as machinery
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Enterprise: The skills, creativity and risk-taking ability that a business person requires to successfully combine and manage the other factors of production
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What to produce?
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Why to produce?
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For whom to produce?
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Main economic agents: households, firms and governments
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closed economy: part of the circular flow of income comprising only domestic decision makers
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open economy: part of the circular flow of income comprising domestic and foreign economic decision makers
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injections: put money into the circular flow of income
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leakages: take money out of the circular flow of income
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Cheatography n. The art of mapping complex subjects into clear, instantly navigable reference guides.
