Summary

Summary Economic Principles: Introduction to economics, principles, definitions, background, demand and supply, production, income and spending etc.

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Course
Economic Principles (ECOP)

Institution
IMM Graduate School (IMM)

Summarises demand and supply and other sections and a breakdown of essential definitions and terms used in the Module. Ensures help with understanding the theory in order for you to grasp the content of the module and understand it more and what is the main key areas to take note of and focus on. ...

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Uploaded on December 3, 2022
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economics
2022
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economic principles
ppc
demand and supply
shifts
university
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Institution
IMM Graduate School (IMM)
Course
Economic Principles (ECOP)

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Economics - Introduction

Glossary of Terms:

Capital goods:
Goods used to produce consumer goods.
Ex; equipment and machinery.

Consumer goods:
The goods which have been made use of and purchased by households.
Ex; milk, butter, bread etc.

Durable goods:
Goods may be made use of on numerous occasions.
Ex; utensils, furniture, handbags etc.

Semi-durable goods:
Goods may be made use of over a limited amount of time or period.
Ex; clothing, candles etc.

Non-durable goods:
Goods which may only be used once and never again.
Ex; toothpaste, food etc.

Final goods:

,Goods which are purchased by the consumer or household.
Ex; headphones, a watch, a cellphone etc.

Public goods:
Referring to goods which are often provided by the government or public
establishments to be used by any individual or group of people.
Ex; road lights and street lighting.

Free goods:
Goods which do not hold a price and cannot be purchased.
Ex; air, sunlight, beach sand etc.

Intermediate goods:
All inputs used in the production process of a final good/s.
Ex; wood, water and other raw materials.

Resources:
Factors contributing towards the process of a service or good being offered.
Ex; public relations and human resources.

Means:
All factors and resources involved in the production process or creation of
something.
Ex; land, workers, employees, finances etc.

Needs:
All the goods and services which people/individuals cannot go without.
Ex: things needed for an organism’s survival, such as water, food, shelter etc.

Wants:
Things which we would like or crave to possess but are not vital/necessary for
basic survival.
Ex; luxury brand items, vacations etc.

Services:
Actions that are not tangible (non-tangible).
Ex; Employee suggestions or private drivers (Uber drivers) etc.

Heterogeneous goods:
Goods are seen as different or opposite in the eyes of the buyer.

Homogeneous goods:
Goods are seen as the same or similar in the eyes of the buyer.

Economic goods:
Goods are set at a certain price.

Economic growth:

,Regarding the variety/expansion in an economic state.

Graph:
A visual representation illustrating the relationship between two or more
values/variables.
Ex; a line graph showing the difference in prices of bread in the first two months
of the year.

Schedule:
A specific guide or graph in the form of a visual table.
Ex; a schedule illustrating specific events of a given day.

Productions Possibility Curve (PPC):
A representation of a graph illustrating the maximum or total amount of
production possibilities possible occurring within a specific country, community,
or society.

Equilibrium:
A balanced state in which other variables/factors have no need for change and
remain constant.

Direct (positive) relationship:
Two variables are linked at the same time by decreasing or increasing.

Inverse (negative) relationship:
Two variables are linked by decreasing or increasing in opposite or different
directions.

Ceteris Paribus:
A term in the Latin language which means "everything else being constant and
equal"

Choice:
Present in everyday life such as the decisions we make and what we choose
instead in replacement of another thing.

Opportunity cost:
The price/cost or sacrifice made when choosing something over another thing,
which was presented with the other chosen thing.

Macroeconomics:
The specific study of larger, global or national economies.
Ex; factors such as inflation and deflation rates in a large/broad economy.

Microeconomics:
The specific study of small or individual entities within an economy.
Ex: the number of sales recorded within a small company or a marketing firm.

, Normative Sciences:
Subjective opinions surrounding sciences.
Ex: partaking in an argumentative discussion on research found in which you
are on the opposing side, as well as politics.

Positive Sciences:
Objective fact/s or factual evidence surrounding sciences.
Ex: written evidence or research backed up but legitimate evidence, as well as
biochemistry.

Social Science:
The specific field of science surrounds and focuses exactly on the behaviour of
humans and the environment in which they interact with each other.

Important terms:
→ Scarcity
→ Means (or resources)
→ Wants
→ Needs and choices
These words make up economics, they are therefore called the elements of
the definition.

What exactly is economics?

→ Economics is the study of how man attempts to satisfy his unlimited
wants and needs through limited resources.
→ To elevate Economics to a scientific standard, the approach should be
positive (based on a fact) rather than normative (based on an opinion).
→ To examine the effect that one variable has on another, by having
control over the environment and experimentation in the natural
sciences. Economics as a human science occasionally must ignore or
hold any other influencing factors/variables “constant” or assume their
limit(place). This condition can be identified as the Ceteris Paribus
assumption. Theories derived this way may be expressed in words,
equations, graphs or even tables.

Scarcity, choice and Opportunity Cost:

→ Deals with wants, needs, resources (means or factors of production),
demand and lastly opportunity cost.

Maslow’s hierarchy of needs:

→ Needs can be known as forming the basics which are necessary for
human survival, ex; food, clothing, shelter and clothing (warmth).

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Summary Economic Principles: Introduction to economics, principles, definitions, background, demand and supply, production, income and spending etc.

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