ECON 208 Chapter 1-7: ECON-208 NOTES

• School: McGill University
• Department: Economics
• Course: ECON 208
• Professor: Irakli Japaridize

Document Summary

What is economics: explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the production possibilities boundary. Economics is the study of the use of scarce resources to satisfy unlimited human wants. A so(cid:272)iet(cid:455)"s resour(cid:272)es are often divided into land, labour and capital. Land includes all natural endowments, such as arable land, forests, lakes, crude oil and minerals. Labour includes all mental and physical human resources, including entrepreneurial capacity and management skills. Capital includes all manufactured aids to production, such as tools, machinery and buildings. We divide what is produced into goods (tangible) and services (intangible) The act of making goods and services is called production, and the act of using them is called consumption. Relative to our desires, existing resources are scares. There are enough resources to produce only a fraction of the goods and services we want. Scarcity implies that choice must be made, and making choices implies the existence of costs.