• Economics - efficient use of limited (scarcity) resources for the purpose of attaining maximum satisfaction of our (unlimited) material wants.
• Scarce resources:
o Property resources: land, materials, capital
o Human resources: labour and enterprise
• Capital – goods manufactured as aids to production
• Enterprise – special human resource (entrepreneurial ability), is an innovator and risk bearer.
• Income payments: rent for land; interest for capital; wages for labor; profit for entrepreneurial endeavor.
• Induction: gathering of facts > arranged systematically and analyzed > produce a generalization.
• Deduction: verification or rejection of this generalization by an appeal to the facts. Hypothetical method.
• Induction and deduction are thus complementary.
• Ceteris paribus – all other things being equal.
• Macroeconomics – behavior of aggregates (collection of specific economic units treated as one unit) within economy. E,g economy as a whole: government, household and business sectors.
• Microeconomics – concerned with specific units within economy. E.g individual firm or household.
• Positive statements are facts, normative statements are value judgements.
• Bias – interfere with objective analysis
• Fallacy of Composition – What is true for an individual is also true for a group.
• Post-hoc fallacy – assumption that because event 2 proceeds event 1, event 1 is the cause of event 2.
• Co ...