Introduction to economics Cheat Sheet by egomezc

Economics is the study of how resources are allocated to meet the needs and wants of indivi­duals, govern­ments and firms within an economy

Microe­con­omics: concerned with the behaviour of indivi­duals and firms

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.

Diagra­matic repres­ent­ations of the maximum combin­ation of two products that an economy can produce when all its resources are used effici­ently, per time period

Efficiency: all resources are put to their best use and there is no wastage in the production process

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

normative economics: Normative economics considers peoples varying opinions and beliefs about what should be. These claims are subjective and expressed as value judgements

Wellbeing

Scarcity

Choice

Change

Sustain­ability

The costs of an economic decision measured in terms of the best altern­ative choice foregone

Basic economic problem: how best to allocate scarce resources to meet the unlimited wants and needs of indivi­duals

Land: The natural resources used in production

Capital: Non-na­tural products used in the production process, such as machinery

What to produce?

For whom to produce?

Main economic agents: househ­olds, firms and govern­ments

open economy: part of the circular flow of income comprising domestic and foreign economic decision makers

leakages: take money out of the circular flow of income