ch01lecture - CHAPTER CHECKLIST When you have completed...

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When you have completed your study of this chapter, you will be able to C H A P T E R C H E C K L I S T Define economics, distinguish between micro- economics and macroeconomics, and explain the questions of microeconomics. 1 Describe the work of economists as social scientists. Explain five core ideas that define the economic way of thinking. Explain why economics is worth studying. 2 3 4
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1.1 DEFINITIONS AND QUESTIONS All economic questions and problems arise because human wants exceed the resources available to satisfy them . Scarcity The condition that arises because the available resources are insufficient to satisfy wants. Faced with scarcity, we must make choices —we must choose among the available alternatives. The choices we make depend on the incentives we face.
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1.1 DEFINITIONS AND QUESTIONS Incentive An incentive is a reward or a penalty—a “carrot” or a “stick”—that encourages or discourages an action. Economics The social science that studies the choices that we make as we cope with scarcity and the incentives that influence and reconcile our choices. The subject has two broad divisions—microeconomics and macroeconomics.
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1.1 DEFINITIONS AND QUESTIONS Microeconomics Microeconomics : The study of the choices that individuals and businesses make, the way these choices interact, and the influence that governments exert on these choices. Macroeconomics Macroeconomics : The study of the aggregate (or total) effects on the national economy and the global economy of the choices that individuals, businesses, and governments make.
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1.1 DEFINITIONS AND QUESTIONS Microeconomic Questions What? What goods and services get produced and in what quantities? How? How are goods and services produced? For Whom? For whom are the various goods and services produced?
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1.1 DEFINITIONS AND QUESTIONS Macroeconomic Questions The three big issues that macroeconomics tries to understand are: The standard of living The cost of living Economic fluctuations—recessions and expansions
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1.1 DEFINITIONS AND QUESTIONS The Standard of Living Standard of living The level of consumption of goods and services that people enjoy, on the average; it is measured by average income per person. Goods and services The objects that people value and produce to satisfy human wants. Goods are physical objects, and services are work done for people.
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1.1 DEFINITIONS AND QUESTIONS For most people achieving a high standard of living means finding a good job. Unemployment The state of being available and willing to work but unable to find suitable work.
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The Cost of Living Cost of living The number of dollars it takes to buy the goods and services that achieve a given standard of living. Inflation
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This note was uploaded on 12/28/2009 for the course MATH Ec101 taught by Professor Mr.keohane during the Fall '08 term at Louisiana College.

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ch01lecture - CHAPTER CHECKLIST When you have completed...

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