Econ Midterm Outline

Econ Midterm Outline - Econ 104 ~Spring 2009 ~Midterm...

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Econ 104 ~ Spring 2009 ~ Midterm Review Topic I What is a social science? Social science: study people’s behavior hard to control study environment, recreate events and be objective; Measure society, the intangible. - Social science deals with society What is the fundamental economic problem? Scarcity What is scarcity? Scarcity situation of having inadequate resources to obtain all of one’s wants. Unlimited wants but limited resources. Scarcity— is the condition that results from society not having enough resources to produce all the things people would like to have What are the four factors of production? The Four Factors of Production 1. Land – includes land, natural resources, and man-made improvements that might be found in a piece of ground. a. Includes timer, water, iron ore, crude oil, natural gas, coal, fish 2. Labor – includes the mental and physical effort of human beings. Moving boxes is physical labor. Writing a book is mental labor. - Division of Labor – splitting up work into smaller, more specialized tasks. - Specialization – allows workers to become experts in a specific area o Leads to increasing output and improved efficiency 3. Capital – capital resources are man-made creations that are used to make goods or services. a. Physical Capital – example: furnaces used to make steel; display shelf b. Human Capital – example: skills and knowledge in a person’s head. After 30 years in the steel industry, the plant manager’s brain is filled with detailed knowledge about the steel making process. 4. Entrepreneurship – a good business sense. A person has the ability to: a. Come up with new products that people will want b. Organize and run a new business successfully c. Manage employees effectively What are implicit wages, rent, interest and profits? Why are they important? These are all forms of income. (Refer to question above) Each factor is rewarded monetarily - Labor (Wages) - Land (Rent) - Capital (Interest) (not necessarily investments in stocks and bonds) - Entrepreneurship (Profits) What is meant by utility in economics?
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Utilities: anything that satisfies hu m an wants and d esires - Utilities – 5 types of utilities i. Elementary : Something that is from nature. Ex: Tree; provides us with shad e. ii. Farmed Utility : Physically m a d e. Ex: Chair or table. iii.
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This note was uploaded on 04/27/2009 for the course ECON 104 taught by Professor Shaffer during the Spring '08 term at Kansas.

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Econ Midterm Outline - Econ 104 ~Spring 2009 ~Midterm...

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