Introduction to Economics

Study Notes

Definition and Scope

Economics is the social science that studies the production, distribution, and consumption of goods and services.
It examines how individuals, businesses, governments, and nations make choices about how to allocate resources to meet their unlimited wants and needs.

Types of Economics

Microeconomics: studies individual economic units, such as households, firms, and markets.
Macroeconomics: studies the economy as a whole, focusing on issues like inflation, unemployment, and economic growth.

Key Concepts

Scarcity: the fundamental economic problem of unlimited wants and needs, but limited resources.
Opportunity Cost: the value of the next best alternative that is given up when a choice is made.
Supply and Demand: the price and quantity of a good or service are determined by the intersection of the supply and demand curves.

Economic Systems

Market Economy: a system in which resources are allocated based on market forces, such as supply and demand.
Command Economy: a system in which resources are allocated by the government.
Mixed Economy: a system that combines elements of market and command economies.

Economic Goals

Economic Growth: an increase in the production of goods and services in an economy over time.
Full Employment: a situation in which all available labor resources are being used.
Price Stability: a situation in which the general price level is stable.
Equitable Distribution of Income: a situation in which the distribution of income is fair and just.

Economic Theories

Classical Economics: emphasizes the role of individual economic agents and the market mechanism.
Keynesian Economics: emphasizes the role of government intervention and aggregate demand.
Monetarism: emphasizes the role of the money supply in determining economic activity.

International Trade

Absolute Advantage: a country has an absolute advantage in producing a good or service if it can produce it more efficiently than another country.
Comparative Advantage: a country has a comparative advantage in producing a good or service if it can produce it at a lower opportunity cost than another country.
Gains from Trade: countries can benefit from trade by specializing in the production of goods and services in which they have a comparative advantage.

Definition and Scope of Economics

Economics is the social science that studies the production, distribution, and consumption of goods and services.
It examines how individuals, businesses, governments, and nations make choices about how to allocate resources to meet their unlimited wants and needs.

Types of Economics

Microeconomics studies individual economic units, such as households, firms, and markets.
Macroeconomics studies the economy as a whole, focusing on issues like inflation, unemployment, and economic growth.

Key Concepts

Scarcity is the fundamental economic problem of unlimited wants and needs, but limited resources.
Opportunity Cost is the value of the next best alternative that is given up when a choice is made.
Supply and Demand determine the price and quantity of a good or service, with the price and quantity determined by the intersection of the supply and demand curves.

Economic Systems

Market Economy is a system in which resources are allocated based on market forces, such as supply and demand.
Command Economy is a system in which resources are allocated by the government.
Mixed Economy is a system that combines elements of market and command economies.

Economic Goals

Economic Growth is an increase in the production of goods and services in an economy over time.
Full Employment is a situation in which all available labor resources are being used.
Price Stability is a situation in which the general price level is stable.
Equitable Distribution of Income is a situation in which the distribution of income is fair and just.

Economic Theories

Classical Economics emphasizes the role of individual economic agents and the market mechanism.
Keynesian Economics emphasizes the role of government intervention and aggregate demand.
Monetarism emphasizes the role of the money supply in determining economic activity.

International Trade

Absolute Advantage is when a country can produce a good or service more efficiently than another country.
Comparative Advantage is when a country can produce a good or service at a lower opportunity cost than another country.
Gains from Trade are the benefits countries can gain from trade by specializing in the production of goods and services in which they have a comparative advantage.

Description

This quiz covers the basic concepts and scope of economics, including microeconomics and macroeconomics. It explores how individuals, businesses, governments, and nations make choices about resource allocation to meet their needs and wants.