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Introduction
Introduction
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Introduction

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  • 1. Introduction<br />Kanako Nakagawa<br />
  • 2. Microeconomic<br />Microeconomic: the study of the behavior of individual markets<br />
  • 3. Scarcity<br />Scarcity: choices that has to be made. Exists because there are limited availability of economic resources relative to society’s unlimited demand for goods and services.<br />
  • 4. Factors of Production<br />Land: physical factor of production. Includes natural resources, which can be both renewable and non-renewable.<br />Labor: the human factor of production. Includes physical and mental contribution of the existing workforce of production.<br />Capital: the factor of production that is made by humans to produce goods and services. Occurs as a result of investment.<br />Entrepreneurship; factor of production involving the organization of other factors of production which includes risk-taking. <br />
  • 5. Opportunity Cost<br />Opportunity cost: the next best alternative foregone when an economic decision is made.<br />
  • 6. Free goods<br />Free goods: goods which are unlimited in supply and has no opportunity costs. Has unlimited supply at market price zero.<br />Economic good: good or service that is relatively scarce and has a price. Involves opportunity cost when it is consumed.<br />
  • 7. Utility<br />Utility: satisfaction or pleasure that an individual derives from the consumption of a good or service. <br />
  • 8. Production Possibilities Curve<br />PPC: shows the maximum combination of goods or services that can be produced by an economy in a given time period, if all the resources in the economy are being used fully and effectively.<br />
  • 9. Output<br />Actual output: the production of goods and services in an economy achieved in a given time period.<br />Potential output: the possible production that would be achieved in an economy if all available factors were employed.<br />
  • 10. Growth<br />Actual growth: occurs when previously unemployed factors of production are brought into use.<br />Potential growth: occurs when the quantity and/or quality of factors of production within an economy is increased.<br />Economic growth: the growth of real output in an economy over time. <br />
  • 11. Development<br />Economic development: a broad concept that involves improvement in standards of living, reduction in poverty, improved health and improved education.<br />Sustainable development: economic development that meets the needs of the present without compromising the ability of future generations to meet their needs.<br />
  • 12. Efficient PPC<br />Good A<br />All resources are used efficiently.<br />A<br />0<br />Good B<br />
  • 13. Unefficient PPC<br />Good A<br />Resources aren’t efficiently used.<br />B<br />0<br />Good B<br />
  • 14. Economic Growth<br />Good A<br />Actual economic growth<br />C<br />B<br />0<br />Good B<br />
  • 15. Shift of Production<br />Good A<br />Shift of production from Good A to Good B<br />A<br />B<br />0<br />Good B<br />
  • 16. Economic Development<br />Shift of production to public and merit goods<br />Goods<br />A<br />B<br />0<br />Hospitals<br />
  • 17. Economic Growth & Development<br />Potential growth is achieved by changes in the quantity and/or quality of the factors of production<br />Capital Goods<br />0<br />Consumer Goods<br />
  • 18. Economy<br />Free market economy: an economy where the means of production are privately held by individuals and firms. Demand and supply determine what to produce, how to produce it and for whom to produce.<br />A planned (command) economy: an economy where the means of production are owned by the state. The state determines what to produce, how to produce it and for whom to produce.<br />Transition economy: and economy in the process of moving from a centrally planned economic system towards a more market-oriented economic system.<br />

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