General Introduction.
ECONOMICS: Social science that explains the relation between limited
resources and unlimited needs.
SCARCITY: the gap between limited resources and theoretically limitless
wants ( lack or shortage of a service or a product).
Money - relative scarcity (comparing)
Microeconomics Page 1
, Chapter One
Monday, November 15, 2021 6:57 PM
Resources / Inputs / Factors of Production:
➢ Land / Nature resources (provided by nature) ----> rent
LLCE
➢ Labor ( mental and physical efforts to do the job ( with skills or no skills)---->salary/ wage
➢ Capital ( human: skilled workers / physical: tools)----> interest.
➢ Enterprise (business owners that combine all 3 resources above to enhance the production---->
take risks to gain profit.
*we use inputs to produce outputs*
Outputs: (goods / service).
Consumers: decision makers/ economic agents:
➢ Households: anyone who is not a business owner or does not have a job or does but he or she are not the
decision maker----> biggest provider of resources.
➢ Firms: business owners.
➢ Government: decision making places.
➢ The rest of the world.
Market : a place where buyers and sellers meet to exchange products and services.
Positive economic Normative economic
Based on analysis Not guaranteed
Guaranteed No sureness
Should, must, maybe…
Principals of Economics:
1. Principal of optimization ( rational (personal cost+ benefit)), making the best choice
possible with given information.
• Consist of three important elements:
1. Budget constraint (it restrict you from spending).
2. Trade off. We make choices because of scarcity
3. Opportunity cost ( the cost of sacrificing the best alternative).
2. Principle of equilibrium (the balance between expectations and reality) equal/balance. Free rider problem :we can use any service without pay
3. Principle of empiricism (we use numbers and data to get analysis to prove any theory)
data.
Microeconomics Page 2
ECONOMICS: Social science that explains the relation between limited
resources and unlimited needs.
SCARCITY: the gap between limited resources and theoretically limitless
wants ( lack or shortage of a service or a product).
Money - relative scarcity (comparing)
Microeconomics Page 1
, Chapter One
Monday, November 15, 2021 6:57 PM
Resources / Inputs / Factors of Production:
➢ Land / Nature resources (provided by nature) ----> rent
LLCE
➢ Labor ( mental and physical efforts to do the job ( with skills or no skills)---->salary/ wage
➢ Capital ( human: skilled workers / physical: tools)----> interest.
➢ Enterprise (business owners that combine all 3 resources above to enhance the production---->
take risks to gain profit.
*we use inputs to produce outputs*
Outputs: (goods / service).
Consumers: decision makers/ economic agents:
➢ Households: anyone who is not a business owner or does not have a job or does but he or she are not the
decision maker----> biggest provider of resources.
➢ Firms: business owners.
➢ Government: decision making places.
➢ The rest of the world.
Market : a place where buyers and sellers meet to exchange products and services.
Positive economic Normative economic
Based on analysis Not guaranteed
Guaranteed No sureness
Should, must, maybe…
Principals of Economics:
1. Principal of optimization ( rational (personal cost+ benefit)), making the best choice
possible with given information.
• Consist of three important elements:
1. Budget constraint (it restrict you from spending).
2. Trade off. We make choices because of scarcity
3. Opportunity cost ( the cost of sacrificing the best alternative).
2. Principle of equilibrium (the balance between expectations and reality) equal/balance. Free rider problem :we can use any service without pay
3. Principle of empiricism (we use numbers and data to get analysis to prove any theory)
data.
Microeconomics Page 2
