Chapter 1 - 1 Chapter One WHAT IS ECONOMICS The ideas of...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter One: WHAT IS ECONOMICS? 1 Why are you here? “The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else.” John Maynard Keynes, The General Theory of Employment, Interest and Money . 1936
Background image of page 1

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

View Full Document Right Arrow Icon
OVERVIEW/QUESTIONS OF THE DAY 2 What does it “cost” when you make a decision? What does is cost you to go to the movies? school? Should the government have bailed out the auto industry? Where do prices come from? Why do we have them? Why can’t everything just be free? Why do they keep going up every year? How much does the United States
Background image of page 2
SOCIETY’S 2-PART PROBLEM Ø Economists see an irreconcilable problem with the world: 1. Human q One of the most fundamental economic assumptions q More is always better (True?) 2. Unfortunately, our ability to satisfy these wants is 3
Background image of page 3

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

View Full Document Right Arrow Icon
Society’s 2-part problem (cont) Resources (a.k.a. factors of production, inputs): the inputs used to make the goods/services that individuals and society desires Raw Materials (land): coal, timber, steel, water, fossil fuels, etc Labor: time of workers Physical Capital: human-made goods used to make other goods (equipment, machinery, etc.) Human Capital: experience, training, education of labor force Entrepreneurship: ability to organize the other inputs, to take the risks 4
Background image of page 4
SCARCITY Scarcity is the fundamental economic problem Your time is scarce Only so many hours in a day – what should you do with them? Your income is scarce Only so many dollars in your paycheck – how should you spend it? Government revenue is scarce Only so many tax dollars collected – what should the govt. do with it? 5
Background image of page 5

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

View Full Document Right Arrow Icon
Our Fundamental Problem! 6 Physical Capital (man-made goods) Resources/Raw Materials (lumber/iron/copper/crude oil/etc) Goods (shoes/jeans/food/etc) Services (medical care/car maintenance/haircuts/etc) Govt. Provided (roads/education/defense/etc) Labor (time/effort/energy) Human Capital (experience/education) Hopper (some economic system)
Background image of page 6
3 QUESTIONS FOR SOCIETY 1. What How much?
Background image of page 7

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

View Full Document Right Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 24

Chapter 1 - 1 Chapter One WHAT IS ECONOMICS The ideas of...

This preview shows document pages 1 - 8. Sign up to view the full document.

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