What is Economics - What is Economics Chapter 1 I Definition of Economics 1 Scarcity a Inability to satisfy all wants and needs b Must choose among

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What is Economics, Chapter 1 I. Definition of Economics 1. Scarcity a. Inability to satisfy all wants and needs b. Must choose among available alternatives 2. Incentive a. Reward that encourages action or penalty that discourages one b. Choices we make depends on this 3. Economics a. Social science that studies the choices that individuals, businesses, governments, and entire societies make as cope with scarcity and incentives that influence and reconcile those choices b. Microeconomics 1. Study of choices that individuals and businesses make, way these choices interact in markets, and influence of governments c. Macroeconomics 1. Study of performance of national economy and global economy II. Two Big Economic Questions 1. How choices end up determining what, how and for whom goods and services get produced? 2. When choices made in pursuit of self-interest also promote social interest? b. What, How, and For Whom? 1. Goods and services a. Objects people value and produce to satisfy human wants ii. What? 1. What we produce changes over time 2. Mining, construction, manufacturing and agriculture gone down, services up iii. How? 1. Factors of production a. Land i. “gifts of nature” we use to produce goods and services ii. Natural resources b. Labor i. Work time and work effort people devote to producing g and s
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ii. Human capital 1. Knowledge and skill that people obtain from education, job training and work experience c. Capital i. Tools, instruments, machines, buildings and other constructions that businesses us to produce g and s ii. Financial capital is not used to produce g and s, not capital d. Entrepreneurship i. Human resource that organizes labor, land and capital ii. Come up with new ideas for businesses iv. For Whom?
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This note was uploaded on 05/06/2009 for the course MGMT 25100 taught by Professor Blanchard during the Spring '09 term at Purdue University-West Lafayette.

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What is Economics - What is Economics Chapter 1 I Definition of Economics 1 Scarcity a Inability to satisfy all wants and needs b Must choose among

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