ECON 1000 Lecture Notes - Global Warming, Cost Accounting, Marginal Utility

72 views4 pages
Published on 7 Nov 2011
School
York University
Department
Economics
Course
ECON 1000
Chapter one
Definition of Economics
All economic questions arise because we want more than we can get. (wants are unlimited and
resources are limited)
Our inability to satisfy all our wants is called scarcity. Even rich people face scarcity
Because we face scarcity, we must make choices .
The choices we make depend on the incentives we face .
An incentive is a reward that encourages an action or a penalty that discourages an action.
Economics is 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. Economics is not only concerned with how to make money
and get rich. Economics is to make right choice. But, because everyone's level is different, we
cannot have equal distribution.
Economics divides in to main parts:
Microeconomics is the study of choices that individuals and
businesses make, the way those choices interact in markets, and the
influence of governments.
Macroeconomics is the study of the performance of the national and
global economies.
Two Big Economic Questions
What, How, and For Whom?
Goods and services are the objects that people value and produce to satisfy human wants.
What?
Agriculture accounts for less than 1 percent of total Canadian production, manufactured goods for
20 percent, and services for 80 percent.
In China, agriculture accounts for 10 percent of total production, manufactured goods for 50
percent, and services for 40 percent.
How?
Goods and services are produced by using productive resources that economists call factors of
production .
Factors of production are grouped into four categories:
Land
Labour
Capital
Entrepreneurship
The “gifts of nature” that we use to produce goods and services are land . (renewable or not
renewable)
The work time and work effort that people devote to producing goods and services is labour .
The quality of labour depends on human capital , which is the knowledge and skill that people
obtain from education, on-the-job training, and work experience.
The tools, instruments, machines, buildings, and other constructions that businesses use to produce
goods and services are capital . (financial capital is included)
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Document Summary

All economic questions arise because we want more than we can get. (wants are unlimited and resources are limited) Our inability to satisfy all our wants is called scarcity. Because we face scarcity, we must make choices . incentives we face. An incentive is a reward that encourages an action or a penalty that discourages an action. Economics is 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. Economics is not only concerned with how to make money and get rich. But, because everyone"s level is different, we cannot have equal distribution. Goods and services are the objects that people value and produce to satisfy human wants. Agriculture accounts for less than 1 percent of total canadian production, manufactured goods for.

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