1. Economics 2
More of the Basics

2. Microeconomics
The study of the decisions made by individuals and small firms/companies
Why do you (a rational person) buy the things you do?
To profit
Profit of enjoyment, time, or money
However, people are not always rational
Why do companies make the things they do
To Maximize Profit
Efficiency- Make the most money possible while spending the least possible

3. Motives We have to make choices because of scarcity
We make those choices based on the best possible outcome (or we should) (Rational)
This is a trade off – what you give up to get what you want
What you give up is called Opportunity Cost
The value of the next best thing
If you buy an Iphone vs Gucci Purse
The opportunity to buy something else
The opportunity lost
Cost and Value are very individual
What has value/cost to me may not have value/cost to you

4. Macroeconomics
The study of large economies (United States, Ohio, Europe)
The study of the entire economy (the world)
The study of a whole economy and not just a part of it

5. Economic Theory
Classical-The economy has cycles that are self correcting
Sometimes we’re boom, sometimes we’re bust
Supply Side Economics-Get the businesses to produce more by lowering taxes on businesses.
This will increase supply thus lower prices and get people to buy
Top Down
Keynesian-Get the people to buy more product by giving them money
Bottom Up

6. Global Economy Tariffs-Taxes on incoming goods (imports)
Free Trade-The belief or practice of countries trading with each other without tariffs
Fair Trade-global trade that follows rules
Protectionism- When a country tries to protect its own companies/goods

7. Global Economy NAFTA-North American Free Trade Agreement
Removes all trade barriers between U.S., Canada, and Mexico
EU-European Union
An agreement between most European nations to act as a single economic unit (no tariffs between countries, a single currency, a joint planning system)
OPEC-Oil Producing and Exporting Countries
Trading agreement between big oil countries to set the price and production of oil