Basic Concepts of Economics

Macroeconomics v. microeconomics

1. Macro: big, national policies such as debt, inflation, and supply & demand.
2. Micro: small, individual units' economic choices. How families and firms interact with the economy.

Positive v. normative economics

1. Positive: describing the world as it is.
2. Normative: prescribing the world as it should be.

Needs v. wants

1. Needs: survival requirements
2. Wants: desires.

Scarcity v. shortage

1. Scarcity: Limited resources with unlimited want.
2. Shortage: Lack of resources due to exceeding demand.

Goods v. Services

1. Goods: Non-human property. Bought, sold, traded and made.
2. Services: Human work for another human. Cannot be made, but only bought, sold, or traded.
3. Capital goods are used to make consumer goods.
4. Consumer goods are the final purchase & product.

Introduction to Crash Course Economics