ECON 1050 Chapter Notes - Chapter 1-2: Comparative Advantage, Absolute Advantage, Capital Accumulation

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Definition of economics: scarcity inability to get everything we want, what society can get is limited by the productive resources available. Incentive reward that encourages an action or a penalty that discourages one. Goods and services: objects people value/produce to satisfy wants, goods physical objects (e. g. cellphones, automobiles, services tasks performed for people (e. g. cellphone service, auto-repair service) How: how we produce is described by technologies/resources we use, the resources used to produce goods and services = factors of production. Factors of production (are grouped into four categories: land, labour, capital, entrepreneurship. Land (cid:862)gifts of (cid:374)atu(cid:396)e,(cid:863) (cid:374)atu(cid:396)al (cid:396)esou(cid:396)(cid:272)es (cid:894)e. g. (cid:373)i(cid:374)e(cid:396)als, oil, gas, (cid:272)oal, (cid:449)ate(cid:396), ai(cid:396), fo(cid:396)ests, fish(cid:895) used to produce goods and services. Labour: work time/effort people devote to producing goods/services. Includes the physical/mental efforts from people on farms, construction sites, factories, shops, offices: quality of labour dependent on human capital (the knowledge/skills people obtain from education, on the-job training, work experience)