Textbook Notes (363,508)
Canada (158,392)
Economics (697)
Chapter 1

Textbook notes Chapter 1.docx

4 Pages
Unlock Document

Western University
Economics 1021A/B
Bruce Hammond

 Scarcity: our inability to get everything we want  What you can afford to buy is limited by your income and the prices you must pay  What governments can afford is limited by the taxes they collect  What society can get is limited by the productive resources available  An incentive is a reward that encourages an action or a penalty that discourages one  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 is the study of the choices that individuals and businesses make, the way these choices interact in markets and the influence of governments  Macroeconomics is the study of the performance of the national economy and the global economy  Two big economic questions  How do choices end up determining what, how, and for whom goods and services are produced? o What? What we produce varies across countries and changes over time o How? Goods and services are produced by using productive resources known as factors of production  Land  Natural resource  Land surface and water resources are renewable  Energy resources are non-renewable  Earns rent  Labour  The work time and work effort that people devote to producing goods and services  Includes the physical and mental efforts of all the people who work  Quality of labour depends on human capital (the knowledge and skill that people obtain from education, on-the-job training, and work experience. It expands over time  Earns wages  Capital: the tools, instruments, machines, buildings, and other constructions that businesses use to produce goods and services  Financial capital: stocks and bonds  Financial capital isn’t used to produce goods and services thus it is not a productive resource  Earns interest  Entrepreneurship: the human resource that organizes labour, land and capital  Entrepreneurs come up with new ideas about what and how to produce, make business decisions and bear the risks that arise from these decisions  Earns profit o For whom?  Who consumes the goods and services that are produced depends on the incomes that people earn  Can the choices that people make in the pursuit of their own self-interest also promote the social interest? o Self-interest: a choice is in your self-interest if you think that choice is the best one available for you o Social interest: a choice is in the social interest if it leads to an outcome that is the best for society as a whole  Has 2 dimensions: efficiency and equity  Efficiency is achieved when the available resources are used to produce goods and services at the lowest possible cost
More Less

Related notes for Economics 1021A/B

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.