Economic’s theory. Its main problems. Microeconomics and macroeconomics

ECONOMIC’S THEORY. ITS MAIN PROBLEMS.
MICROECONOMICS AND MACROECONOMICS.
Example: How many movie theatres will be built? How many high performance cars will be built, and how many trucks and station wagons?
2. How will the various goods and services be produced?
Example: Will the supermarket operate with three checkout lines and clerks using laser scanners or six checkout lines and clerks keying in prices by land? Will credit card companies use computers to read charge slips in New York or ship paper records to Barbados for hand processing?
3. For whom will the various goods and services be produced? The distribution of economic benefits depends on the distribution of income and wealth. Those wit a high income and great wealth consume goods and services than those with low income and little wealth.
Example: Will the people of Hong Kong get to consume more than people of Ethiopia?
Economics is the study of how people choose to use their scarce resources to satisfy their unlimited wants
• Scarcity:
◦ can’t have all we want of anything
◦ no “free goods”
• Resources(factors of production):
▪ Land (Land is the term we use to include all natural resources, including land but also it includes things like minerals, timber, water, etc.)
▪ Labor (Labour is used as a broad term in economics to include all man's physical and mental talents applied to producing goods and services)
▪ Capital - manufactured product used to produce something. It is used in two ways in economics. Sometimes we are talking about financial capital but, more frequently in economics, capital is considered to be capital goods - that is, those goods that are used to produce more goods (either consumer goods or capital goods).
▪ Entrepreneurial ability (It refers to the ability to combine initiative, policy decision-making, innovation, and risk-taking in the production of goods and services).
Each of the 4 factors of...

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