ECON-E 201 Lecture Notes - Lecture 1: Financial Capital, Capital Good, Human Capital
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ECON-E 201 Full Course Notes
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The choices we make depend on incentives, a reward that encourages a choice or a penalty that discourages a choice. Capital goods are human-made goods that do not directly satisfy human wants: entrepreneurship: the creative ability of individuals to seek profits by combining resources to produce goods and services. Entrepreneurship organizes resources to produce goods and services. By the above definition money by itself is human capital. Financial capital is the money value of paper assets, such as stocks, bonds, or deed to a house. Financial capital by itself is not productive; instead, it is only a paper claim on economic capital. This question is generally referred to as the three fundamental economic questions that all economies must answer: what to produce, goods and services are the objects that people value and produce to satisfy human wants. We can examine whether the self-interested choices serve the social interest for a variety topics.
