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The study of how we allocate our scarce resources to satisfy our unlimited wants.
- 1) Scare resources
- 2) Unlimited wants
- Labor (L)
- Capital (K)
- Land (N)
Production Possibilities Curve aka Transformation Curve
Shows the combinations of output that a nation can produce given its resources and technology.
Law of Increasing Costs
Once all factors of production are at maximum output and efficiency , producing more will cost more than average.
Exchange of goods that does not involve the use of money.
A system based on private property, free enterprise and competition.
By Adam Smith - self interest leased to an increased standard of living in a nation.
Author of Wealth of Nations
Place where buyers and sellers meet, negotiate and exchange.
Law of Demand
There is a negative (or inverse) relation between price and quantity demanded.
Law of Supply
There is a positive (or direct) relation between price and quantity supplied.
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