Lecture1 - ECO100 - ECO 100Y ECO 100Y Introduction to...

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Unformatted text preview: ECO 100Y ECO 100Y Introduction to Introduction to i Economics Economics Lecture 1: Lecture 1: Introduction Introduction Gustavo Indart Slide 1 hat is Economics? hat is Economics? hat is Economics? hat is Economics? Economics is the science that studies how resources are used in order to satisfy human wants or needs e characterized for being scarce and Resources are characterized for being scarce and human wants for being unlimited There are 3 main types of resources: natural resources (land, minerals, water, etc.) human resources (mental and physical) capital resources (tools, machinery, buildings, etc.) Gustavo Indart Slide 2 ommodities ommodities Commodities Commodities In a capitalist economy, resources are used to produce commodities (i.e., goods and services sold in the market) Resources used in capitalist production are called factors of production Commodities are produced in order to satisfy an effective demand based on human needs Human needs are satisfied through the consumption of commodities Gustavo Indart Slide 3 Economic Agents in a Economic Agents in a Capitalist Society Capitalist Society Society as producer consists of firms A firm employs factors of production in order to produce commodities that it sells to other firms, to households, or to the government Society as consumer consists of households nsists of all the people living under A household consists of all the people living under one roof and who make joint financial decisions Gustavo Indart Slide 4 nderlying Behavioural nderlying Behavioural Underlying Behavioural Underlying Behavioural Assumptions Assumptions y to Producers try to maximize profits y to eir Consumers try to maximize their degree of satisfaction or utility Gustavo Indart Slide 5 Circular Flow of Circular Flow of Expenditures and Income Expenditures and Income Commodities and factors of production are bought and sold in the market Firms supply commodities in the commodities market and demand factors of production in the factors market pply the Households supply factors of production in the factors market , and demand commodities in the commodities market Gustavo Indart Slide 6 Flow of Expenditure and Flow of Expenditure and Income Income FACTOR MARKETS Labour, land & capital Labour, land & capital ages rent & IRMS HOUSEHOLDS Wages, rent & interest FIRMS Expenditures on goods & services GOODS MARKETS Goods & services Goods & services Gustavo Indart Slide 7 icroeconomics and icroeconomics and acroeconomics acroeconomics Microeconomics studies the decisions of individual households and firms (e.g., determination of the price ( g , p for apples in the market for apples) Macroeconomics studies the economy as a whole (e.g., the determination of the price level for the onomy as a whole) economy as a whole) Gustavo Indart Slide 8 conomic Models conomic Models Economic Models Economic Models Economists develop economic theories...
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This note was uploaded on 01/19/2010 for the course ECONOMICS ECO100 taught by Professor J.l.carr during the Fall '08 term at University of Toronto- Toronto.

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Lecture1 - ECO100 - ECO 100Y ECO 100Y Introduction to...

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