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Chapter 1

Chapter 1 - What is Economics?.docx

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Department
Economics
Course
Economics 1021A/B
Professor
Jeannie A Gillmore
Semester
Fall

Description
What is Economics? Chapter 1 9/9/2012 5:09:00 PM We face scarcity,  We want more than we can get and our choices are affected by  Scarcity – inability to satisfy all our wants incentives. - everyone faces scarcity - eg. A city wants to build bridges, improve education and upgrade Give an example of scarcity and  The choices we have to make depend on incentives incentives.  Incentives – a reward that encourages or a penalty that discourages an action  Economics - social science, studies choices that individuals and businesses make while facing scarcity and incentives Define economics  Microeconomics – choices individuals and businesses make, and how they influence and distinguish markets, the influence of governments between micro and - eg. How would a new tax rule affect Google? macro econ.  Macroeconomics – performance of the national economy and the global economy. Give examples. - eg. Why did inflation in Canada start to increase in 2008? Explain the two big Two Big Economics Questions questions of 1. How do choices end up determining what, how, and for whom goods and services economics are produced? 2. How can choices made in the pursuit of self-interest also promote the social interest? Explain the Goods & Services difference between - Goods > physical objects eg. Cars goods and services. - Services > tasks performed for people eg. Car repair Provide examples. 4 Factors of Production What are the factors 1. LAND - rent of production? Give 2. LABOR - wages **most income examples. 3. CAPITAL - interest 4. ENTREPRENEURSHIP - profit 1. Gas, coal, oil, water, air, natural resources 2. Effort people put to produce goods and services, labor quality depends on human capital – knowledge and skill people obtain 3. Tools businesses use to obtain goods and services, different from financial capital 4. Human resources that organize labor, land, capital What is the If you are making a choice that is the best for you, it is in self-interest. difference between If these choices lead to a result that benefits society as a whole, then it promotes social self and social interest. interest? Resources are used efficiently when: When are resources 1. At the lowest possible cost used efficiently? 2. In the quantities that give the greatest possible benefit. What areas show the Tension between social and self-interest is shown in 5 aspects. tension between social and self- Globalization – expansion of international trade, borrowing and lending, and investment interest? Give Information Revolution – 1990s, 2000s examples. Global Warming Natural Resource Depletion Economic Instability What is th
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