BASIC TERMS IN APPLIED

ECONOMICS
Applied Economics

-is the application of basic

assumptions of economics to
real-world situations,both
isolated and interrelated with
sets of current circumstances.
Five Areas Of Economics
ECONOMICS-is a social science w/c analyzes the
production ,consumption and distribution of
goods and services.
1.MICROECONOMICS
-the prefix "micro-"refers to small -scale
interacion and refers to households as firms
interacting in the market for consumption of
goods.
2.MACROECONOMICS
-the prefix " macro-"refers to large-scale
interactions.
-unlike microeonomics,examines as a
whole.

3.INTERNATIOAL ECONOMICS
-analyzes the flow of goods and
services between nations.
4.THEORY
is the field in which the models are
derived and applied to current
problems.

5.HISTORY
is the field which focuses on
economic theories and writings of
the past.
DIFFERENCE BETWEEN ECONOMICS AND
APPLIED ECONOMICS
1.POSITIVE ECONOMICS
-is the study of criteria of what
is.
2.NORMATIVE ECONOMICS
-is the study if how things ought
to be.
3.APPLIED ECONOMICS
-is the study of the relationship
between positive and normative
economics.
THREE MAJOR TYPES OF ECONOMICS
1.MARKET ECONOMY
consumers' behavior drives the
production.
2.COMMAND ECONOMY
the decisions of the government
drive the production.

3.MIXED ECONOMY
combination of market and
command economy.
ADVANTAGES AND DISADVANTAGES

-market system is generally more

efficient,faster to react to changing
environments and thus more responsive.
-however,large-scale market econmies
tend to be volatile.
-command economies can be inefficient
and central planning can be slow to
respond to changing environments.
-individual initiative and creaivity can be
hampered and often a class of powerful
bureaucrats develops.