ECON 1B03 Study Guide - Final Guide: Dime (United States Coin), Charity Shop, Inferior Good

• School: McMaster University
• Department: Economics
• Course: ECON 1B03
• Professor: Hannah Holmes

Document Summary

Black: how goods and services move through the economy. Blue: how financial institutions function in the economy. Green: how foreign markets function in the economy. Economics: the study of how society allocates scare resources to satisfy society"s unlimited wants. Scarcity: society has limited resources and therefore cannot produce all the goods and services people wish to have. Microeconomics: focuses on the individual parts of the economy. How households and firms make decisions and how they interact in specific markets. Macroeconomics: looks at the economy as a whole. Economy-wide phenomena, including inflation, unemployment and economic growth. Market economy: allocates resources through the decentralized decisions of firms and households. Households: decide what to buy and who to work for. Firms: decide who to hire and how much to produce. Economic rationality: systematically and purposefully using information to make the best decision to achieve objectives. Perfect information: everyone knows everything with no uncertainty. Asymmetrical information: someone knows more about something than someone else.