Economics 1021A - Economics 1021A What is Economics...

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Economics 1021A – What is Economics Scarcity: Our inability to satisfy all of our wants Incentive: a reward that encourages an action or a penalty that discourages one Economics: 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 - Microeconomics o The study of the choices that individuals and businesses make, the way these choices interact in markets, and the influence of governments Why are people buying more DVD and fewer movie tickets How could a tax on e-Commerce affect ebay - Macroeconomics o The study of the performance of the national economy and the global economy Why did inflation in Canada star to increase in 2008? Can the bank of Canada keep our inflation rate under control by raising interest rates? Two big questions - How do choices end up determining what how and for whom goods and services are produced - How can choices made in the pursuit of self-interest also promote the social interest Goods and services are the objects that people value and produce to satisfy human wants - Goods are physical objects such as cellphones - Services are tasks performed for people, such as cellphone services What? - What we produce changes over time How? - Goods and services are produced by using productive resources that economists call factors of production o Land, Labor, Capital, Entrepreneurship Land - Used to produce goods and services - Natural Services o Minerals, oil, gas, coal, water, air, forests, fish Labor - The work time and work effort that people devote to producing goods and services - Physical and mental efforts - Human capital o Quality of labor o Expands over time Capital - The tools, instruments, machines, buildings and other constructions that businesses use to produce goods and services are called capital o Financial Capital Bonds, stocks and money Not a productive resource
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Entrepreneurship - The human resources that organizes labor, land and capital o What determines the quantities of factors of production that are used to produce
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Economics 1021A - Economics 1021A What is Economics...

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