This preview shows pages 1–3. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: 1 Econ 1, Winter 2008 RATIKA NARAG, Ph.D. RECAP OF LECTURE1 What is Economics? Fundamentally about choices made with scarce resources or resource constraints Opportunity Cost; trade-off Scarcity Choice Opportunity Cost RECAP OF LECTURE 1 Scarcity, Choice, and Opportunity Cost Human wants are unlimited, but resources are not Three basic questions to answer: 1. What gets produced? 2. How is it produced? 3. Who gets what is produced? LECTURE 2 Production Process that transforms scarce resources into useful goods and services Factors of Production: 1. Land 2. Labor 3. Capital 4. Human Capital LECTURE 2 Production Resources/FOP are the inputs into the process of production Goods and services are the outputs of the process of production LECTURE 2 Labor: Many Types 2 LECTURE 2 Non-Human Resources Capital: Tools, equipment, investment goods. Not stocks and bonds Land: Natural capital; environmental or natural resources LECTURE 2 Consumer Goods and Services Durable goods: TVs, cars, washing machines, relatively stable expenditure pattern over last 70 years Non-durable goods: food, clothing, decrease in expenditure pattern over last 70 years Services: dental work, manicures, car repairs, increase in expenditure pattern over last 70 years LECTURE 2 Public Goods and Services Pure Public: N ational defense, lighthouses, only produced by Govt. Quasi-Public: E ducation, housing, medical care, produced in part by Govt. and in part by the private sector LECTURE 2 Methods of Economics Positive economics: studies economic behavior without making judgments; Describes what exists & how it works Normative economics: analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe courses of action LECTURE 2 Positive Economics Descriptive, involves compilation of data that describe phenomena and facts Economic theory, involves models of behavior Analysis of what is, was, or will be LECTURE 2 Normative economics Policy economics, analyses outcomes of economics behavior Evaluates them as good or bad, may...
View Full Document
- Fall '08
- Opportunity Cost