ECON 1B03 Chapter Notes - Chapter 1-8: Fop, Physical Capital, Deadweight Loss

• School: McMaster University
• Department: Economics
• Course: ECON 1B03
• Professor: Holmes

Document Summary

Econo mics is the study of how society allocates scarce resources to satisfy people" unlimited wants. Resou rces are anything used to make something else. They are also called factors of production (fop) or inputs into production. 4 main categories of resources are labour, land, capital (physical) and entrepreneurship (brings the 1st 3 together) Scarce means that the quantities of resources available at any time are limited in supply. If something has a price on it, it"s scarce. Economic rationality means people use the information they have to make the best decisions for themselves. Consumers decide what and how much to purchase to get the greatest satisfaction of their purchase. Perfect information means that everyone knows everything they need to know with certainty. Asymmetric information is something we are often faced with; someone knows something somebody else doesn"t know. Selling a car on kijiji knowing if a car has been in an accident, when the seller does not.