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Chapter 1

Chapter 1 - What is Economics.docx

4 Pages
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Department
Economics
Course Code
ECON 101
Professor
Corey Van De Waal

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September 12 2013Lecture 2What is EconomicsKey Terms and Ideas by chronological orderScarcityour inability to satisfy all our wants For example a child wanting pop and candy but has only enough money for pop suffers from scarcity A millionaire who wants to spend his weekend playing golf and attend a business meeting faces scarcityo Scarcity forces us to choose among our optionsour choices are based on incentivesIncentivesa reward that encouragespenalty that discourages an action o Example of how incentives help with our decision at a time of scarcity a child will choose to buy pop if the price drops The millionaire will choose to attend a business meeting if it means 10 million are at stakeEconomicsthe social science studying choices that people society individual business etc make as they deal with scarcity and incentives There are two main parts o Microeconomicsstudy of the choices that individuals and business make and its result in markets and the influence of government o Macroeconomicsstudy of the performance of national and global economyTwo Big Economic Questions1 How do choices end up determining what how and for whom goods and services are produced 2 How can choices made in the pursuit of selfinterest also promote the social interest What How and For Whom o Good and servicesobjects that people value and produce to satisfy human wants Goods are physical services are performances o WhatWhat we produce changes over the course of time for example approximately 20 of Canadians worked in farms over 65 years ago and is now 3 today o HowProduction of goods and services are based on factors of productionFactors of Productiongrouped into 4 categoriesLandgifts of nature or natural resources used to produced goodsLabourphysical and mental work time and work effort people use to produce goods and services with quality depending on human capital which is the knowledge and skill people acquire through education experience etcCapitaltools instruments machines other constructions businesses use to produce goods and services
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