- Macroeconomics => the study of the economy as a whole
- Ex. inflation, minimum wage, and international market
- Ex. looking at the whole forest
- Microeconomics => the study of individuals or specific units of the economy; how household and firms make decisions and how they interact in markets
- Ex. looking at individual trees but not the forest
2. Positive Economics vs Normative Economics
- Positive Economics => an attempt to describe the world as is
- Very descriptive
- Collects and presents facts
- Normative Economics => an attempt to prescribe how the world should be
- Opinion based
3. Needs vs Wants
- Needs => basic requirements for survival
- Ex. water, food, shelter, air
- Wants => Desires
4. Scarcity vs Shortage
- Scarcity => it is the most fundamental economic problem facing all societies
- unlimited wants meet with limited resources
- PERMANENT
- Shortage => quantity demanded exceeds quantity supply
- TEMPORARY
5. Goods vs Services
- Goods => tangible commodity
- can be bought, sold, traded, and produced
- 2 Types
- Capital Goods => items that are used in the creation of other goods
- Consumer Goods => intended for final use by the consumer
- Services => work that is perform for someone
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