chapter 1 and 2

chapter 1 and 2 - 7 September 2011 Economics the science of...

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7 September 2011 Economics the science of choice – the science that explains the choices that we make and how those choices change as we cope with scarcity study of mankind’s behavior in the ordinary business of life study of the use of scarce resources to satisfy unlimited human wants Needs and wants exist in every economic issue. Four items in economics are considered to be scarce resources: L, labor (workforce, etc.) K, capital (machines, inventories, constructions, buildings, infrastructures, this is not liquidity or financial assets etc.) T, land (not only the surface, but virgin raw material or resources like crude oil or minerals, etc.) E, enterprise (managers with high-concept ideas) Labor gets wages (W), capital gets interest rates (Int), land gets rent (R), enterprise gets profits (Pr). This combined allots for the national income / gross domestic product (NI or GDP). Economic goods, items that have a price (what you have to sacrifice in order to consume this item); an item can become an economic good once there is a
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This note was uploaded on 09/21/2011 for the course ECON 010 taught by Professor Stein during the Fall '07 term at UPenn.

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chapter 1 and 2 - 7 September 2011 Economics the science of...

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