ECON 101 Chapter Notes - Chapter 1: Opportunity Cost, Financial Capital, Human Capital

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Published on 16 Oct 2011
School
UBC
Department
Economics
Course
ECON 101
ECON%101%%004:%%Introduction/%Chapter%1%
Microeconomics
Thursday, September 16, 2010
ECONOMICS
All economic questions arise because we want more than we can have
Change in technology, environment, and global economy. Positive: information age.
Negative: terrorism
Our inability to satisfy all our wants is called: scarcity p. 2
Because we face scarcity, we must make choices
The choices we make depend on the incentives we face.
An incentive is a reward that encourages an action or a penalty that discourages an action
CHAPTER 1
Economics: is the 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.
MICROECONOMICS: (choices individuals and businesses make, the way choices
interact with markets, and the influence of the government) p. 2
MACROECONOMICS: (performance of the national and global economy) p. 2
9 China, Indian, Brazil, and Russia playing a greater role in expanding global economy
9 Scarcity & incentives are a huge part in economics
Two Major Economic Questions:
1) How do choices end up determining what, how, and for whom good and services are
produced?
2) How can choices made in the pursuit of self-interest also promote the social interest?
What, How, and For Whom?
WHAT: Goods and services
-decrease in farming and manufacturing caused by the increase in services
HOW: Factors of production> production of goods and services with the usage of productive
resources
9 Land – natural resources (minerals, oils, gas, water, air etc..)
9 Labour – work and time people devote to producing goods and services
*quality of labour depends on human capital – knowledge from education, work
experience, job-training people obtain
9 Capital – (investment) tools, instruments, machines, buildings that businesses use to
produce goods and services
*Physical capital – tools, machines, buildings etc.
*Financial capital – stocks, bonds
9 Entrepreneurship – human resources that organize labour, land and capital
Entrepreneurs come up with new ideas about what and how to produces, and make business
decisions
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Document Summary

Economics: all economic questions arise because we want more than we can have, change in technology, environment, and global economy. Economics: is the 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. Microeconomics: (choices individuals and businesses make, the way choices interact with markets, and the influence of the government) p. 2. Macroeconomics: (performance of the national and global economy) p. 2. China, indian, brazil, and russia playing a greater role in expanding global economy. Scarcity & incentives are a huge part in economics. Decrease in farming and manufacturing caused by the increase in services. How: factors of production> production of goods and services with the usage of productive resources. Land natural resources (minerals, oils, gas, water, air etc) Labour work and time people devote to producing goods and services. Capital (investment) tools, instruments, machines, buildings that businesses use to.