Basic Concepts of Economics

Get Started. It's Free
or sign up with your email address
Basic Concepts of Economics by Mind Map: Basic Concepts of Economics

1. Economics

1.1. The study of how societies use scarce resources to produce valuable goods and services and distribute them among different individuals

1.1.1. Scarcity

1.1.1.1. when goods are limited relative to desires

1.1.2. Efficiency

1.1.2.1. the most effective use of the limited resources in order to satisfy people's wants and needs

1.2. The Two Branches of Economics

1.2.1. Microeconomics

1.2.1.1. studies the behavior of indivual entities like private firms and households

1.2.2. Macroeconomics

1.2.2.1. studies the overall perfomance of the economy

1.3. Goods

1.3.1. Free Goods

1.3.1.1. goods that can be consumed without reducing the consuming of others

1.3.2. Economic Goods

1.3.2.1. goods and service that have a benefit, a value or utility

1.4. Points of View

1.4.1. Positive Economics

1.4.1.1. Refers to the empirical data behind the questions.

1.5. Normative Economics

1.5.1. Involves ethical percepts and norms of fairness.

2. The Three...

2.1. Basic Questions

2.1.1. What is produced?

2.1.2. How is it produced?

2.1.3. For whom is it?

2.2. Fallacies

2.2.1. Post Hoc

2.2.1.1. Because an event occured, it caused another event.

2.2.2. Failure to Hold Other Things Constant

2.2.2.1. Fails to keep things constant when analyzing a variable in an economic system.

2.2.3. Composition

2.2.3.1. Assuming that what holds true for a part of the system applies to the whole.

3. Production

3.1. Factors of Production

3.1.1. Labor

3.1.2. Land

3.1.3. Capital

3.2. Inputs and Outputs

3.2.1. Outputs

3.2.2. Inputs

3.2.2.1. Commodities or services that are used to produce goods and services

3.3. Production-Possibility Frontier

3.3.1. Shows the maximum quantity of goods that can be efficiently produced by an economy, given its technological knowledge and the quantity of available inputs

3.3.2. Economic Growth

3.3.2.1. Public Goods

3.3.2.1.1. Those goods and services provided by the government for free public use.

3.3.2.2. Private Goods

3.3.2.2.1. Those manufacture and sold by private companies in order to stasify consumer demand.

3.3.2.3. Economies must choose between Public Goods and Private Goods

3.3.2.4. Investing for future consumption requieres spending more on Public Goods rather than spending more on Private Goods

3.3.3. Opportunity Cost

3.3.4. Efficiency

3.3.4.1. means that the economy’s resources are being used as effectively as possible to satisfy people’s desires.

3.3.4.2. Productive Efficiency

3.3.4.2.1. when an economy cannot produce more of one good without producing less of another good; this implies that the economy is on its production-possibility frontier.

4. Types of Markets

4.1. Market economy

4.1.1. Individuals and private firms make major decisions about products and consumption.

4.2. Laissez-Faire

4.2.1. Government keeps a completely hands-off approach to the economy.

4.3. Command Economy

4.3.1. the useful goods or services tht result from the inputs that are either consumed or further developed

4.3.2. Government makes all importan decisions about production and distribution.

4.4. Mixed Economy

4.4.1. The universal category, since all economies are comprised of multiple different models.