Microeconomics

Economics: Studies the production, distribution, & consumption of goods and services.

Market Economy: Production and the consumption are the result of decentralized decisions made by many firms and individuals. The US is a market economy, which has no authority telling it what to do. Individual producers make what they think will be most profitable and the consumers buy what they want and choose.

The have the ability to coordinate with highly complex activities and reliably provide consumers with the goods and services they want.

Command Economy: Central authority makes decisions about production and consumption. They do not work very well because are often unable to find the necessary items.

Invisible Hand: A reference to how market economy manages to harness the power of self-interest for the good of society.

Microeconomics: Study of how individuals make decisions and how these decisions interact. (Key Theme: Individuals pursuing their own interests often promote the interest of society)

Market Failure: When an individual’s pursues on interest rather than the interest of society; thus making society worse off.

The society doesn’t run smoothly and it experiences fluctuations of ups and downs.

Recession: A downturn in the economy.

Macroeconomics: Concerned with the overall ups and downs of the economy.

Economic Growth: The growing ability of the economy to produce goods and services.

Individual Choice: Decisions by an individual about what to do and what not to do. All economic activities involve individual choice.

Principle 1: Choices are necessary because resources are scarce.

Resource: Anything that can be used to produce something else. Economy resources are land, labor (time of workers), capital (machinery, buildings, and other man made productive assets) and human capital (educational achievements and skill of workers).

Scarce: When there isn’t enough of a resource available to satisfy all the ways society wants to use it. (Such as...