MICROECONOMICS: The study of the Markets: Supply and Demand:
behaviour of consumers and producers
operating in the individual markets of an When the demand for a good/resource meets the supply and production
economy capability of that good, the market reaches equilibrium.
Positive Economic Statement:
an objective statement that can be Changes in one of either the supply or demand of that good, without a
tested against facts to be declared either change in the other will lead to price changes and either a deficit or
true or false surplus of that good.
Negative Economic Statement:
a subjective opinion, or value judgement,
that cannot be declared either true or
false.
Scarcity and choice: Scarcity is a
situation which arises because people
have unlimited wants in the face of
limited resources. This forces people to
make choices on what goods they
consume. This decision is known as
OPPTERTUNITY COST.
Opportunity cost:
In decision making, the value of the next
best alternative foregone. I.e., the cost
of the next best alternative good that a Key Diagrams:
consumer could have bought.
Factors of Production (FOP):
Resources used in the production
process; inputs into production including
labour, capital, land and
entrepreneurship
Opportunity cost and the production
possibility curve (PPC): This is the
maximum combination of goods that can
be produced with a given set of
resources (FOP)
behaviour of consumers and producers
operating in the individual markets of an When the demand for a good/resource meets the supply and production
economy capability of that good, the market reaches equilibrium.
Positive Economic Statement:
an objective statement that can be Changes in one of either the supply or demand of that good, without a
tested against facts to be declared either change in the other will lead to price changes and either a deficit or
true or false surplus of that good.
Negative Economic Statement:
a subjective opinion, or value judgement,
that cannot be declared either true or
false.
Scarcity and choice: Scarcity is a
situation which arises because people
have unlimited wants in the face of
limited resources. This forces people to
make choices on what goods they
consume. This decision is known as
OPPTERTUNITY COST.
Opportunity cost:
In decision making, the value of the next
best alternative foregone. I.e., the cost
of the next best alternative good that a Key Diagrams:
consumer could have bought.
Factors of Production (FOP):
Resources used in the production
process; inputs into production including
labour, capital, land and
entrepreneurship
Opportunity cost and the production
possibility curve (PPC): This is the
maximum combination of goods that can
be produced with a given set of
resources (FOP)
