Macroeconomics is the study of economy as a whole

Microeconomics is the study of specific units of economy

Positive economics deals with the facts and describes the world as is

Normative economics attempts to prescribe how the world should be

Needs are a requirement

Wants are a citizen's desire

Goods are bought commodities

Services is work provided by someone

Scarcity is the problem of facing unlimited wants with limited resources

Shortage means to have more demand than supply

Factors of Production

1. Land- natural resources
2. Labor- work force
3. Capital- tools and skills
4. Entrepreneurship- risk taker

Trade offs are the alternative to what one gives up

Opportunity Cost is the best next alternative

Allocative Efficiency are the most desired products being produced by society

Productive Efficiency are the products being produced in the least costly way

Efficiency is using resources to maximum production

Underutilization is using fewer resources than the economy is capable of using

Elasticity of Demand is the measure of how a consumer reacts to change in price

Elastic Demand is not a necessity and there are available substitutes

Inelastic Demand is one that is not sensitive to price change

Total revenue is the total amount received from selling goods and services

Fixed cost is the cost that does not change no matter how much is produced

Variable Cost is the cost that rises or falls depending on how much is produced

Marginal cost is the cost of producing one more unit of a good

Demand is the quantities that people are able to buy at various prices

CAUSES in "Change in Demand"

1. Change in buyer's taste
2. Change in the # of buyers
3. Change in the price of related goods
4. Change in income
5. Change in expected goods

Supply is the quantity that producers and sellers are willing and able to produce

CAUSES in "Change in Supply"

1. Change in weather
2. Change in the # of sellers
3. Change in the cost of production
4. Change in technology
5. Change in expectations
6. Change in taxes or subsidies

Inside the curve- attainable but ineffective

On the curve- attainable and efficient

Outside the curve- not attainable