Chapter 1 - Chapter 1 What is Economics I Definition of...

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Chapter 1: What is Economics? I. Definition of Economics a. Scarcity-the inability to satisfy all our wants b. Incentive-reward that encourages an action or a penalty that discourages one c. Economics-social science that studies the choices that individuals, businesses, governments, and entire societies make as a they cope with scarcity and the incentives that influence and reconcile those choices d. Microeconomics-study of the choices that individuals and businesses make, the way these choices interact in markets, and the influence of governments e. Macroeconomics-study of the performance of the national economy and the global economy II. Two Big Economic Questions a. How do the choices end up determining what, how, and for whom goods and services are produced? b. How can choices made in the pursuit of self-interest also promote the social interest? c. What, How, and For Whom? c.i. Goods and services-the objects that people value and produce to satisfy human wants c.ii. c.iii. How? c.iii.1. Goods and services are produced by using productive resources that economists call factors of production c.iii.2. Land: gifts of nature that we use to produce goods/services, natural resources c.iii.3. Labor: the work time and work effort that people devote to producing goods/services –physical and mental efforts c.iii.3.a. Human capital: knowledge and skill that people obtain from education, on-the-job training, and work experience—dependant on quality of labor c.iii.4. Capital: tools, instruments, machines, buildings, and other constructions that business use to produce and services c.iii.5. Entrepreneurship: human resource that organizes labor, land, and capital c.iv. For Whom? c.iv.1.
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This note was uploaded on 11/14/2011 for the course ECO 201 taught by Professor Dunlevy during the Fall '08 term at Miami University.

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Chapter 1 - Chapter 1 What is Economics I Definition of...

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