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ECON 219 (3)
Chapter 1

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Economics (Arts)
ECON 219
Christopher Ragan

ECON 219 Chapter 1 --> The complexity of the Modern Economy - self-organizing : chain of events work together/interact without official control - self-interest = foundation --> Efficiency : resources being produced quickly in it's demand at low cost Characteristics of Market Economies: - self-interest guides individuals - individuals respond to incentives - prices + quantities set in relatively free market, individuals trade voluntarily - institutions -> created by state protect property, enforce contracts Scarcity : not enough resources to fit demand. There will always be scarcity Resources : land, labor, capital (physical methods of productivity, metal/tools/etc.) - "factors of production" - goods and services RESOURCES --> CHOICE --> OPPORTUNITY COST Choice: deciding which resource is most in need Opportunity cost : the price of the choice (using next best option) --> prices in a market economy reflect scarcity FOUR KEY PROBLEMS of any economy 1. What is Produced and How? --> resource allocation 2. What is Consumed and by Whom? * Microeconomics : the study of the allocation of resources as it is affected by the workings of the price system. --> who decides what is distributed? 3. Why are Resources Sometimes Idle? --> an economy oprating inside production possibilities is either neglecting to use all of it's resources or is using them inefficiently. --> why are there working seeking jobs who can't find them? --> should canadians/governments worry about idle resources? can anything be done? 4. Is Productive Capacity Growing? --> two ways to get growth (assuming resources are being used effici
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