The first lesson of economics is scarcity: there is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics. - Thomas Sowell

Economic Basic Terms Modules 1-3 AP Microeconomics “Then you should say what you mean,” the March Hare went on. “I do,” Alice hastily replied; “at least I mean what I say – that’s the same thing you know.” “Not the same thing a bit!” said the Hatter. “Why, you might just as well say that ‘I see what I eat’ is the same thing as ‘I eat what I see!’” - Lewis Carroll, Alice in Wonderland, 1865

Basics… misc. terms Goods & Services Inputs and Outputs Stock and Flow

Basics 1: The study of… Economics – Micro versus Macro Theories & Models – Scientific Method – Economic Principle (predicts probable behavior) – Ceteris paribus Positive versus Normative

Basics 2: Limits & Alternatives Scarcity Opportunity Cost Utility Incentive Marginal Analysis – MB – MC – Rational Choice Three Economic Questions: 1.What 2.How 3.For Whom

Basics 3: Factors of Production & WIRP Factors of Production – Labor, Capital, Land, Entrepreneurship WIRP (factor payments) – Wages, Interest, Rent, Profit

Basics 4: Macro basics Circular Flow Business Cycle Unemployment, GDP, and Inflation Standard of Living Economic Growth