Economics 1021A/B Chapter : Textbook Summery

• School: Western University
• Department: Economics
• Course: Economics 1021A/B
• Professor: Jeannie Gillmore

Document Summary

An incentive is an inducement to take a particular action. An incentive can be a benefit or a cost. Economics: a social science: economists distinguish between two types of statements: what is and what ought to be, statements about what is are called positive statements and they might be right or wrong. A positive statement can be tested by checking it against the facts: states about what ought to be are called normative statements. These statements depend on values and cannot be tested. In the figure below, when x increases from 2 to 6, y increases from 3 to 6. In the figure, the relationship between price and consumption is shown when temperature is held constant: one curve keeps the temperature constant at 21 c and the other curve keeps the temperature constant at 32 c. If we stop producing pizza and move all the people who produce pizza into producing cola, we produce at point a.