Economics Key Terms

Economics

• The study of how things are bought and sold.

Microeconomics

• Economic decisions that affect individuals in an economy.

Macroeconomics

• Economic decisions that affect the economy of a country.

1. Pepsi introduces a new flavor of soda.2. Russia prints more money causing inflation.3. Red Cross needs more blood desperately.4. Microsoft still tied up in legal battle.5. Congress to tackle social security.6. Walmart opens 100 new stores.7. China tries to limit the amount of births.8. Ford releases new version of the Mustang.9. U.S. trade deficit widens.

Micro or Macro Issues?

Scarcity• The fact that we

have unlimited wants and limited resources (never enough).

Opportunity Cost

• What you must give up to obtain something else.

Goods

• Any item that can be bought or sold.

Services

• Any action for which a person is paid.

Consumers

• People who buy things.

Producers

• People who make and sell things.

Capital Resources

• Tools or equipment used to make goods and services.

Human Resources

• People working to make goods and provide services.

Natural Resources

• Materials found in nature that can be used to make goods or services.

Opportunity Cost

Goods and Services

G

G

G

G

G

G

S

S

S

S

S

S

SS

S

S

Economic Resources

Coal

Cow

Oil

Diamonds

Store Clerk

Janitor

Carpenter

Artist

Oven

Telephone

Tractor

Factory

Economic Resources• Natural Resources

– lemons, water, sugar, ice, wood

• Human Resources– lemonade Seller

• Capital Resources– cups, spoons, pitcher,

chair, stand

Supply

• The number of items ready for sale.

Demand

• The number of people that want to buy something.

Equilibrium Point

• Condition where the price and quantity a seller wants matches the price and quantity a buyer wants.

Surplus

• When supply is greater than demand. (extra)

Shortage

• When demand is greater than supply. (not enough)