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Economics (chapter 1) by Mind Map: Economics (chapter 1)
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Economics (chapter 1)

What is Economics?

Economics is a study of how to distribute scarce resources among competing ends.

Microeconomics focuses on individual consumers and businesses

Macroeconomics takes a broad view of the economy

Economists deal with the constant economic problem.

Their wants are unlimited

They face a limited supply of economic resources

Economic agents must continually make choices

Economic Choice

Economists assume that economic decision-makers maximize their own utility.

Decision-makers must keep in mind the opportunity cost of each alternative.

Opportunity cost is defined as the utility of the best forgone alternative.

The Production Possibilities Curve

The production possibilities curve shows a range of possible output combinations for an economy.

It has a concave shape, which reflects the law of increasing opportunity costs.

It highlights the scarcity of resources.

Basic Economic Questions

What to produce

How to produce

For whom to produce

Economic Systems

Traditional economies focus on non-economic concerns and have tight social constraints

Market economies are consumer-centered and innovative but create inequality and instability

Command economies equalize incomes but often have a lack of freedom

The Range of Economic Systems

Most countries have mixed economies

Modern mixed economies include both private and public sectors

Traditional mixed economies combine traditional sectors with private and/or public sectors

Economic Goals

Viable balance of payments


Income equity

Price Stability

Full Emplloyment

Economic growth

Environmental sustainability

Complementary and Conflicting Economic Goals

Economic goals maybe complementary.

The relationship between full employment and economic growth

Economic goals maybe conflicting

The relationship between price stability and full employment