Introduction to Economics

The term “inferior good” describes a good for which demand decrease as incomes increase. They are the opposite of “normal goods,” which are goods for which demand increases as incomes increase.

The way scarce resources get distributed within an economy determines the type of economic system. There are four different types of Economic Systems; a traditional economy, a market economy, a command economy, and a mixed economy.

A free market economy is a type of economy that promotes the production and sale of goods and services, with little to no control or involvement from any central government agency.

Capitalism is an economic system in which private individuals and/or companies own the four factors of production. The four factors are land, capital, land/natural resources, and entrepreneurship.

Economics, a discipline and set of methodologies within the social sciences, can be described in a multitude of ways. The field focuses on the distribution, consumption, and production of wealth; one can also say that economists study human behavior and choice regarding buying and selling.

In a command economy system, it is not the free market but the government that makes important decisions like which goods to produce, what amount of these goods to produce, and how much they cost. The government also makes decisions about incomes and investments.

The four factors of production are inputs used in various combinations for the production of goods and services to make an economic profit. The factors of production are land, labor, capital, and entrepreneurship.

Ceteris Paribus is a Latin phrase which literally translates to “holding other things constant”. Petrus Olivi was the first person to use the term with an economic context in 1295. In economics, this phrase is used to mean “all else being equal.”

The best way to show a country’s available resources, along with the maximum two goods produced from those resources, is by calculating the production possibilities frontier (PPF).

A country’s economic development is usually indicated by an increase in citizens’ quality of life. ‘Quality of life’ is often measured using the Human Development Index, which is an economic model that considers intrinsic personal factors not considered in economic growth, such as literacy rates, life expectancy, and poverty rates.

A normative statement carries judgment. Normative statements are opinions. They are subjective statements.