• Scarcity: Our inability to get everything we want. (It is universal.)
• What we can get is limited by the productive resources available.
• Because we cannot get everything we want, we must make choices.
• For example, time constraints prohibit you from both partying and studying, so you must make
• Your choices must be made consistent with others, if you choose to buy a laptop, someone else
must chose to sell it.
• Incentives reconcile choices: it is either a reward for doing an action, or penalty prohibiting one.
• Price is an incentive (ask to clarify this).
• Economics: social science that studies the choices that individuals, businesses, governments,
and entire societies make as they cope with scarcity and the incentives that influence and
reconcile those choices.
• Divided into two parts: macroeconomics, microeconomics.
• Microeconomics is the study of choices from individuals and businesses, the way these choices
interact in the market, and the influence of government.
• Macroeconomics deals with the performance of the global/nation economy.
• Two big questions: How do choices influence what, how, and for whom, good and services are
produced? Can the choices that people make out of self interest promote promote social interest.
• Goods and services are those things which people value and use to satisfy wants.
• Agood is a physical object, a service is a task.
• In Canada, services>manufactured goods>agriculture
• Goods and services are produced by productive resources called factors of production.
• They are: Land, Labor, Capital, Entrepreneurship
• Land: “Gift of Nature,” it includes all natural resources.
• Labor: The time and effort of people, including both physical and mental efforts.
• Quality of labor depends on human capital: expertise people gain from education and training.
• For example, I am increasing my own human capital by studying economics.
• Capital:All other resources used to make goods and services, includes tools, machines,
• Although financial capital is used to buy physical capital, it does not directly produce goods and
services and is thus not a productive resource.
• Entrepreneurship: The human resource that organizes the other factors of production.
Entrepreneurs are the individuals who run the business and make business decisions.
• Who consumes the goods depends on individual's incomes
• People earn income by selling the services of their factors of production: land earns rent, labor
earns wages, capital earns interest, and entrepreneurship earns profit.
• Labor earns the most income (70%)
• The top 20 poorest earn 5% of income, top 20 poorest earn 50% of the income.
• Achoice is in self interest if it is the best a