Macroeconomics

The study of how we allocate our scarce resources to satisfy our unlimited wants.

• 1) Scare resources
• 2) Unlimited wants

• Labor (L)
• Capital (K)
• Land (N)

Shows the combinations of output that a nation can produce given its resources and technology.

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.

There is a negative (or inverse) relation between price and quantity demanded.

There is a positive (or direct) relation between price and quantity supplied.