By our purpose of analysis:
Positive economics deals with
how the economy works bare
Normative economics deals
with what should be used to
make judgments about the
economy, identify problems and
- the time human beings spend producing good
and services - that means labor hrs.
-something produced that is long-lasting a good
rule of thumb is that capital should last at least a
year - example?
- useful to distinguish two different
the face of it, scarcity of these resources
causes the scarcity of all goods and services
(we might desire) produced out of them.
Is it entirely true? No
Misallocation of resources at least partly
responsible tooso the idea of optimum
Key concept: Opportunity Costs
The opportunity cost of any choice is what we
must forgo when we make that choice that is
this money (or time) could have been used for
other things that you value.
- In a different way, true cost of any choice you
Economics is the study of choice under conditions of scarcity
(scarcity of what?).
- Intuitively, we are forced to make some choice
As individuals and societies we are faced with limited resources
(dont you believe?) and vir