Posted by: Khadija Awad
What is Economics?:
The study of how humans choose and use scarce resources. Economics is concerned with
production, consumption and transfer of wealth.
limited resources -> the problem of scarcity <- unlimited wants
Factors of Production:
● Land (Natural resources)
● Labour (Human input and resources)
● Capital (Machinery and man-made resources which help to produce other goods
and services)
● Enterprise (A person who can control and manage a firm and take risks and
decisions that are necessary to make firms run successfully)
The Economic Problem and Opportunity Wants
- Opportunity cost: The next best alternative given up when making a choice
between two alternatives
Key Words:
- Consumer: the people who buy goods, services and products
- Consumption: the using up of goods and services or products to satisfy needs
and wants
- Consumption expenditure: the money spent on goods, services and products
Different types of goods:
1- Consumer (a good that satisfies consumer wants)
2- Capital (man-made goods that help to produce other goods)
3- Public (goods and services provided by the government, paid by the government and
for free)
4- Merit (goods provided by the government even if they can’t afford them, like
healthcare)
5- Free (goods which are abundant in supply, natural resources like the air and sunlight)
6- Economic (goods that are scarce in supply and can only be consumed with a price)
Factor Rewards and Mobility
What are FACTOR REWARDS?:
The payments different factors of production require and receive to participate in productive
activity
,Posted by: Khadija Awad
Land -> rent
Labour -> wage
Capital -> interest
Enterprise -> profit
What is FACTOR MOBILITY?:
Refers to ease of which
resources from factors of
production (land, labour,
capital and enterprise) can be
moved from one activity to
another without increasing
cost or making us lose output.
------> Occupational mobility:
the ability to move factors of
production between different
productive tasks
Occupational immobility: a
factor of production that can’t move between different productive tasks
------> Geographic mobility: the ability to move different factors of production to different
locations
Geographical immobility: a factor that can’t move locations
Production Possibility Curve
PPC of a company shows the maximum possible output combinations of two goods or services
that it can produce with a given set of inputs consisting of natural resources and other factors of
production.
● Efficient: using all the resources fully (on the curve)
● Inefficient: not using all the resources fully (under the curve)
● Attainable: could reach (on the curve or under the curve)
● Unattainable: couldn’t reach (above the curve)
,Posted by: Khadija Awad
What causes Outward shifts in PPC?:
1- more natural resources (more rain = more
crops)
2- supply of labour increases (hiring more
workers and employees)
3- new stock of capital (new machinery)
4- new technology (new laptops, improved
technology in the workplace)
5- education and training for employees (higher
education and training days)
6- improvement in healthcare reduces employee
absences (better medication)
7- investment in modern infrastructure (roads, internet)
What causes Inward shifts in PPC?:
1- non-renewable resources are depleted
(deforestation or pollution)
2- supply of labour decreases (fewer workers)
3- capital wears out is not replaced (old
machinery or slow machines)
4- workforce skills decline (employees can’t
use technology properly)
5- economy’s infrastructure becomes old
What are consumer goods?
Products related and made for direct consumption (like pizza)
What are capital goods?
Products made for indirect consumption, and that create consumer goods. They are
tools and machinery that produce consumer goods
What else can change the PPC?:
- Specialization and trade: trade allows countries to consume beyond their own
production possibilities.
Macro/Micro Economics and Market
- Positive economics: what is, it has no value judgements.
, Posted by: Khadija Awad
- Normative economics: what ought to be, has value judgements.
- Microeconomics: studies the individual agents and markets and is the analysis of
the market behaviors of individual consumers and producers. Microeconomics
deals with individuals, families, firms, industries, demand, supply and cost of
production. Example of questions: if prices of cars go up, what will happen to
consumer markets? If Daniel gets a raise in his job, how will this affect the
amount he spends?
- Macroeconomics: studies the entire national economy and how it works, it
involves understanding the whole country’s output, income, employment and
demand. Example: inflation, imports, exports, national income (GDP)
MICRO/MACROECONOMICS ARE LINKED
What is the Market?
Any set of arrangements that bring together all the producers and consumers of a good
or service so they may exchange. Markets are made up of all the producers willing and able to
make and supply to consumers that are willing and able to buy.
What is Barter?
In trade, it's a system of exchanging goods or services for other goods or services without using
money.
Macro/Micro Economics and Market
Economic sectors:
1. Private: Businesses not owned by the government
2. Public: Businesses owned by the government
What is Economics?:
The study of how humans choose and use scarce resources. Economics is concerned with
production, consumption and transfer of wealth.
limited resources -> the problem of scarcity <- unlimited wants
Factors of Production:
● Land (Natural resources)
● Labour (Human input and resources)
● Capital (Machinery and man-made resources which help to produce other goods
and services)
● Enterprise (A person who can control and manage a firm and take risks and
decisions that are necessary to make firms run successfully)
The Economic Problem and Opportunity Wants
- Opportunity cost: The next best alternative given up when making a choice
between two alternatives
Key Words:
- Consumer: the people who buy goods, services and products
- Consumption: the using up of goods and services or products to satisfy needs
and wants
- Consumption expenditure: the money spent on goods, services and products
Different types of goods:
1- Consumer (a good that satisfies consumer wants)
2- Capital (man-made goods that help to produce other goods)
3- Public (goods and services provided by the government, paid by the government and
for free)
4- Merit (goods provided by the government even if they can’t afford them, like
healthcare)
5- Free (goods which are abundant in supply, natural resources like the air and sunlight)
6- Economic (goods that are scarce in supply and can only be consumed with a price)
Factor Rewards and Mobility
What are FACTOR REWARDS?:
The payments different factors of production require and receive to participate in productive
activity
,Posted by: Khadija Awad
Land -> rent
Labour -> wage
Capital -> interest
Enterprise -> profit
What is FACTOR MOBILITY?:
Refers to ease of which
resources from factors of
production (land, labour,
capital and enterprise) can be
moved from one activity to
another without increasing
cost or making us lose output.
------> Occupational mobility:
the ability to move factors of
production between different
productive tasks
Occupational immobility: a
factor of production that can’t move between different productive tasks
------> Geographic mobility: the ability to move different factors of production to different
locations
Geographical immobility: a factor that can’t move locations
Production Possibility Curve
PPC of a company shows the maximum possible output combinations of two goods or services
that it can produce with a given set of inputs consisting of natural resources and other factors of
production.
● Efficient: using all the resources fully (on the curve)
● Inefficient: not using all the resources fully (under the curve)
● Attainable: could reach (on the curve or under the curve)
● Unattainable: couldn’t reach (above the curve)
,Posted by: Khadija Awad
What causes Outward shifts in PPC?:
1- more natural resources (more rain = more
crops)
2- supply of labour increases (hiring more
workers and employees)
3- new stock of capital (new machinery)
4- new technology (new laptops, improved
technology in the workplace)
5- education and training for employees (higher
education and training days)
6- improvement in healthcare reduces employee
absences (better medication)
7- investment in modern infrastructure (roads, internet)
What causes Inward shifts in PPC?:
1- non-renewable resources are depleted
(deforestation or pollution)
2- supply of labour decreases (fewer workers)
3- capital wears out is not replaced (old
machinery or slow machines)
4- workforce skills decline (employees can’t
use technology properly)
5- economy’s infrastructure becomes old
What are consumer goods?
Products related and made for direct consumption (like pizza)
What are capital goods?
Products made for indirect consumption, and that create consumer goods. They are
tools and machinery that produce consumer goods
What else can change the PPC?:
- Specialization and trade: trade allows countries to consume beyond their own
production possibilities.
Macro/Micro Economics and Market
- Positive economics: what is, it has no value judgements.
, Posted by: Khadija Awad
- Normative economics: what ought to be, has value judgements.
- Microeconomics: studies the individual agents and markets and is the analysis of
the market behaviors of individual consumers and producers. Microeconomics
deals with individuals, families, firms, industries, demand, supply and cost of
production. Example of questions: if prices of cars go up, what will happen to
consumer markets? If Daniel gets a raise in his job, how will this affect the
amount he spends?
- Macroeconomics: studies the entire national economy and how it works, it
involves understanding the whole country’s output, income, employment and
demand. Example: inflation, imports, exports, national income (GDP)
MICRO/MACROECONOMICS ARE LINKED
What is the Market?
Any set of arrangements that bring together all the producers and consumers of a good
or service so they may exchange. Markets are made up of all the producers willing and able to
make and supply to consumers that are willing and able to buy.
What is Barter?
In trade, it's a system of exchanging goods or services for other goods or services without using
money.
Macro/Micro Economics and Market
Economic sectors:
1. Private: Businesses not owned by the government
2. Public: Businesses owned by the government
