Unit One: Basic Concepts of Economics

Introduction

There are a few simple concepts that we as economic students must understand before going any further into this class. They include the difference between macroeconomics and microeconomics, positive economics and normative economics, needs and wants, goods and services, productive efficiency and allocative efficiency, and scarcity. 

• Macroeconomics: The study of major components of the economy 
• Microeconomics: The study of how households and firms make decisions and how they interact in markets
•  Positive Economics: Attempts to describe the world as it is (REALITY)
• Normative Economics: Says how the world SHOULD be
• Needs: Basic requirements for survival
• Wants: A desire
• Goods: A tangible commodity
• Services: Work performed by someone else
• Productive Efficiency: Products are being produced in the least costly way
• Allocative Efficiency: Products being produced are the ones that society most desires
• Scarcity: The MOST FUNDAMENTAL PROBLEM facing all societies

"Satisfying unlimited wants with limited resources" 

 4 Factors of Production

1. Land: Natural Resources
2. Labor: Work force
3. Capital
1. Human
2. Physical
4. Entrepreneurship: Taking risks

Side Notes

•  Opportunity cost is what you give up to get something else. The next best alternative
• When the PPC shifts to the left there is:
• A permanent lost of productive capacity
• A decrease in the labor force, work skills, and education
• When the PPC shifts to the right there are:
• Technological advances
• New discoveries
• Or it is because of trade

Supply 

•  The quantities that producers or suppliers are willing or able to produce or sell at various prices
• There is a direct relationship between price and quantity supplied
• Refer back to note sheet for the causes of ^ in supplied

 Demand

• The quantities that people are willing or able to buy at various prices
• There is an inverse relationship between price and quantity demanded
• Refer back to notesheet for the causes of ^ in demanded

Take a look at this example of a Supply and Demand Graph!

Production Costs:

Fixed Cost: A cost that does not change no matter how much is produced 
Variable Cost: Cost that fluctuates or changes depending on how much is produced
Marginal Cost: The cost of producing one more additional unit of a good

 Equations: 

• TC=TFC/Q
• AFC=TFC/Q
• AVC=TVC/Q
• ATC=TC/Q
• ATC=AFC=AVC
• MC=new TC-old TC

Example Table: 

 

Conclusion

These were the main topics or notes that I felt needed to be highlighted in my blog. For the past three weeks I have learned there is a lot more going on when the new iPhone goes on sale, when I find a coupon for a burger, or just chose a Pepsi instead of a Coke. This class comes with a new perspective, or outlook, or the simple things I spend money on. I may now think, "Why do I want this soda instead of the other?", "What made me buy this laptop now instead of later?", "Is there a reason why I bought french fries too?". The answers to those questions are all determinants, a change in this or that. I have learned that there is a reason for everything do, economically speaking of course. I look forward to learning more about what shapes this country's and world's money based society. 

Suggested Questions/Comments: 

1. Comment on your thought process when purchasing a fast food meal and relate it back to what you have learned in economics.
2. What is determinant do you believe has a greatest effect on either demand or supply? Explain.
3. Explain how you would react after seeing a positive or negative article about your favorite restaurant. Give examples for various positive and negative advertisements. Relate this back to what you have learned in this unit. 
4. Give examples of things that have a fixed or variable cost.
5. Correct any of my typos and higher my education.
6. Feel free to comment anything else you feel would get you your desired grade. 

4 Months and 10 Days Until Graduation