Concerns of Economics102

Concerns of Economics102 - 1. Concerns of Economics Income:...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1. Concerns of Economics Income: primary resources available for current consumption * Consumer goods and services are consumed in the current period Wealth: capital goods used for future consumption or production * Capital goods are not consumed in the current period and include: * Consumer durable goods such as houses and automobiles * Producer durable goods such as plant and equipment * Intangible capital such intellectual property rights * Human capital such as knowledge, skills, and health of the labor force * Natural resources such as land, oil and coal deposits Growth: increase in income and wealth * Growth is measured in terms of per capita income or wealth Equity: distribution of income and wealth * A more equitable distribution income and wealth is considered preferable. * However, redistributive policies which undermine the incentives to create income or wealth raise difficult issues. 2. Driving Forces of Economics Production: creation of goods and services * Capital and labor combine to create consumer and producer goods Trade: exchange of goods and services * Buy and sell goods * Transfer goods from lower value users to higher value users Investment: capital for future production * Producer durable goods such as plant and equipment * Research and development expenditures on new products and technologies * Education for the workforce to acquire human capital Government Infrastructure * Legal System for private property, contracts, and corporations * Physical infrastructure of roads and sanitation * National defense and police protection 3. Capitalism Capitalism = Market Economy with Private Property What is Private Property? * Ownership of capital by individuals and businesses, not government * Land, buildings, durable goods * Derived from English Property Law (1160 1660) * Indefinite exclusive possession with right to devise and alienate * Devise means to will the property to others (e.g. family) at death * Alienate means to sell or rent the property to someone else What is a Market Economy? * Individuals decide when to work, consume, and save * Businesses decide when to invest, produce, and sell * Government does NOT make these decisions * Consequences of poor decisions born by individuals and businesses 4. Som Government ownership of important property and resources Government ownership of the major businesses * Managers are hired to make decisions on investment, production, and sales * Individuals decide on work, consumption, and saving Markets are employed to allocate labor, goods, and services * Government regulation of these markets...
View Full Document

Page1 / 89

Concerns of Economics102 - 1. Concerns of Economics Income:...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online