Intro

Last updated Sep 12, 2023 Edit Source

Opportunity cost is the alternative option in a choice.

Positive economics is the testing and developing economic theory - subjects that are testable.

Normative economics reflects opinions rather than facts - cannot be tested objectively.

• +ve - If we increase government health spending, it will increase public expenditure.
• -ve - We should increase government spending.

• Simplified representation of economic reality showing relationships between certain economic variables
• Determine cause and affect

• Shows all combination of goods and services that can be produced by an economy given the available resources and level of technology.

• An economy that solves the economic problem in a network of separate but interconnected markets.

• Buyers and sellers (create supply and demand)
• A commodity
• Voluntary exchange
• A process, mechanism or arrangement through which buyers and sellers meet

• Goods and services
• Households supply, firms demand

• Firms demand, households supply