Econ Textbook Notes

Econ Textbook Notes - 1WhatisEconomics 2010 Scarcity: o o ....

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1 What is Economics? 2010 Definition of Economics - Scarcity:  the inability to satisfy all of our wants o EVERYONE  faces scarcity. . from the rich to the poor o We must  choose  because of scarcity - Choices  we make are based on  incentives o Incentives:  reward that encourages an action or penalty that discourages one - ECONOMICS : is the social science that studies the  choices  that individuals,  businesses, governments and entire societies make as they cope with  scarcity  and the  incentives that influence and reconcile those choices o Economics is divided into two  parts: Microeconomics:  the study of choices that individuals and businesses make,  the way these choices interact in markets and the influence of governments. ..  some micro questions include: Why are people buying more DVDs and fewer movie tickets Macroeconomics:  the study of the performance of the national economy and  the global economy . ..  some macro questions include: Why did inflation in Canada start to increase in 2008? Two big Economic Questions: o How do choices end up determining what, how and for whom  goods and  services are produced o How can choices made in the pursuit of self-interest  also promote social   interest - What, How and for Whom? o Goods and services:  objects that people value and produce to satisfy human  wants goods  are physical objects services  are tasks performed for people
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o goods and services  are produced using productive resources called   factors of production: land:  natural resources; water, oil, fish, gas, coal, forests, labour:  the work time and effort that people devote to producing goods and  services. . includes both  physical  and  mental efforts  capital:  tools, instruments, machines, buildings and other constructions that  businesses use to produce goods and services human capital:  knowledge and skill people obtain from education, on the  job training and work experience financial capital:  money, stocks and bonds. .. enables businesses to  borrow the funds that they use to buy physical capital   entrepreneurship:  the human resource that organizes land, labour and  capital  o people earn incomes by selling the services of the factors if production they own:
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Econ Textbook Notes - 1WhatisEconomics 2010 Scarcity: o o ....

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