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Economics - Scarcity - study of choices for best use of scarce resources…
Economics - Scarcity - study of choices for best use of scarce resources to best satisfy human needs and wants
What/how much to produce? How to produce? For whom to produce? / resource ownership / economic decision-making
free market (price rationing)
planned economy
mixed (virtually all economies in the world), differences lie in how they are combined and the degree to which one predominates
Sustainability
Without leaving behind fewer or lower quality resources for future generations
Environment, renewable resources
Practicality
Factors of production - 'capitals'
Human capital - labour
Natural capital - land + natural resources
Physical capital - man-made inputs
Financial capital - entrepreneurship, investments (bonds, stocks)
Models
PPC: maximum combined output that can be produced, given full employment of resources and efficiency, which demonstrates
scarcity -->. choice --> opportunity cost
For each additional unit of computers produced, marginal opportunity cost is larger, because the of specialised fop
efficiency, growth through increase in quantity/quality of fop
marginal opportunity cost is constant because specialised fop are similar for the two goods
Circular flow of income
Income flow = expenditure flow = output flow
'Leakages' (saving, taxes, imports) and 'injections' (investments, exports, government spending)
Injections > Leakages: larger flow, vice v.
Method of economics
Positive
Based on logic (can be true or false to an extent), including hypothesis, ceteris paribus assumption (holding other variables constant), empirical evidence (real world data), theories+hypothesis, models, laws, refutation
Normative
Based on beliefs or value judgements about what should happen, what is good or bad, morality
including value judgements in policy-making, equity and equality
History of economics - Adam Smith
Laissez faire (let it do, free)
Self-interest --> competition --> efficiency
Government: national defence, security and justice, public infrastructure
Specialisation of labour for economic growth
