To, Mark Daniel V.

1E2 August 22, 2018

Basic Concepts:

A. What is Economics?

B. Key Terms

C. Economic Systems

D. Production Possibilities

E. Comparative Advantage

A. What is Economics?

- Economics is the science of scarcity. It is about limited resources and not just about

money. It is about us making precise choices regarding what we have since we cannot

have everything we’d like. Economics is also about being efficient with what we

currently have. On the other hand, Scarcity is when we have limitless wants or desires

despite the fact of having limited or in short of resources.

B. Key Terms: Microeconomics vs. Macroeconomics

 Microeconomics- It is the study about the concept of small economic units like

firms, individuals, industries, governments, and more.

 Macroeconomics- It is the study about the whole economy itself. It is like the “big

picture” of economics. The likes of unemployment, inflation, GDP, etc. are under
 Macroeconomics. This topic will also tackle how the economy rise or fall

depending on the situation.

 Trade-offs – Everything we would sacrifice, or we would let go for us to make a

certain choice.

 Opportunity Cost- A choice where we must give up an asset like profit or

something that benefits us for us to achieve something new.

 Investment- The type of payment companies or businesses usually do to further

enhance their company’s or business’ growth.

 Consumer Goods- A certain product made for direct consumption like food.

 Capital Goods- A certain type of product made for indirect consumption like

kitchen utensils and electronics. These goods are often made to produce the

consumer goods.

 Human Capital- It is the knowledge or skillset needed to produce things. It is a

must to make the capital and consumer goods. It is also earned through proper

education and experience to a certain work.

 The Four Factors of Production- Land, Labor, Capital, and Entrepreneurship.