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Economics - Macroeconomics Chapter1:Introduction 20:26:00...

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Macroeconomics Chapter 1: Introduction 23/01/2010 20:26:00 Scarcity: our inability to satisfy all our wants Everyone faces scarcity Where all economic questions arise from  Faced with scarcity, we must choose among available alternatives Incentive: reward that encourages an action or a penalty that discourages one  Creates choices  Economics: a social science that studies the choices of individuals, businesses,  governments and entire societies make as they cope with scarcity and the incentives  that influence choices/ a social science concerned with optimum allocation of limited  resources among unlimited wants Microeconomics: study of the choices that individuals and businesses make,  the way these choices interact in markets, and the influence of governments  o Includes topics such as consumer behavior or theory of firm Macroeconomics: the study of the performance of the national and global  economy  o Includes topics such as inflation, unemployment, gdp growth, the role  of govt and the Fed We study economics b.c we have limited resources   o Anything that is free is an unlimited resource o Nothing is free in life due to opportunity costs  Limited or scarce resources we pay a price for  Good and services: objects that people value and produce to satisfy human  wants Goods=physical objects Services=tasks performed by people Factors of production/Economic resources Land=the area of the country, under the land and its natural resources
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o Price of land=rent o Ways to increase land Trade Increasing the productivity of the land productivity=output/input recycling 
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