The study of how people allocate their limited resources to satisfy their unlimited wants. Economics is the study of how people make choices.
What are Resources?
Things used to produce goods and services to satisfy peolpe's wants.
What are Wants?
What people would buy if their incomes were unlimited
What happens in economics?
In economics, we examine situations in which individuals choose how to do things, when to do things, and with whom to do them with. Ultimately,the purpose of economics is to explain choices.
What is Micro-economics ?
Microeconomics is the part of economic analysis that studies decision making undertaken by individuals( or households) and by firms. It is like looking through a microscope to focus on the small parts of our economy.
What is Macro- economics ?
Macroeconomics is the part of economic analysis that studies the behavior of the economy as a whole. It deals with economywide phenomena such as changes in unemployment , in the general price level, in national income.
Total amounts or quantities;aggregate demand, for example, is total planned expenditures throughout.
Economic system is.....
A society's institutional mechanism for determining the way in which scare resources are used to satisfy human desires.
What are the three questions a society's ask when it comes to the problem of allocating their scarce resources ?
1. What and how much will be produced ?
2. How will items be produced ?
3. For whom will it be produced ?
Command and control/ Central planning
Under command and control, this authority decides what items to produce and how many, determines how the scarce resources will get organized in the items' production, and identifies who will be able to obtain the items.
Price systems/ market system
E.g. Automobile manufacture/ government
The assumption that people do not interntionally make decisions that would leave them worse off.