ғᴜɴᴅᴀᴍᴇɴᴛᴀʟ ᴇᴄᴏɴᴏᴍɪᴄ ᴄᴏɴᴄᴇᴘᴛs

                  6 - 8

average supermarket - 47,000 different items

basic assumptions: how individuals make choices, how 

to allocate scarce resources, how individuals interact

scarcity - amount of work, energy, knowledge, capital

available to produce good is limited

desires are insatiable

trade off - every choice we make requires a sacrifice

opportunity cost - what you have to give up, not 
necessarily same as monetary price you pay

rationality - compare benefits along with opportunity costs

not born with ability to infallibly calculate costs and benefits

specialize, trade with other people, benefits outweigh cost
for both involved

economic analysis - relies on observation, description, 
measurement of economic activity, also theory

often consist of diagrams or math formulas

simplicity and lack of realism allow us to see what assumptions
and characteristics are important

positive economics - describe and explain economic phenomena,
predict what happen u particular circumstances

identify cause and effect relationships, value free

normative - what should be as opposed to what is

cost benefit comparisons, value judgements

identify how increase in minimum wage would affect different
groups and provide estimates of their size

Pareto efficiency - no way to improve one person's well being
without taking it from someone else

microeconomics - individual behavior, particular markets

macroeconomics - overall performance of national economy