The study of how we allocate our scarce resources to satisfy our unlimited wants.
1) Scare resources
2) Unlimited wants
Production Possibilities Curve aka Transformation Curve
Shows the combinations of output that a nation can produce given its resources and technology.
Law of Increasing Costs
Once all factors of production are at maximum output and efficiency , producing more will cost more than average.
Exchange of goods that does not involve the use of money.
A system based on private property, free enterprise and competition.
By Adam Smith - self interest leased to an increased standard of living in a nation.
Author of Wealth of Nations
Place where buyers and sellers meet, negotiate and exchange.
Law of Demand
There is a negative (or inverse) relation between price and quantity demanded.
Law of Supply
There is a positive (or direct) relation between price and quantity supplied.