Economics 1021A/B Chapter Notes - Chapter 1: Opportunity Cost, Marginal Cost, Carbon Footprint

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Chapter 1 Concepts/Definitions ECON 1021 09/19/2015
Scarcity: Inability to satisfy all our wants.
- What everyone – society – can get is limited by the productive resources available
- Since we can’t get everything we want, we must make choices
Incentive: A reward that encourages an action or a penalty that discourages one
- Prices act as initiatives
- There is a price where choices to buy and sell are consistent
Economics: 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
- Split into 2 parts: Microeconomics and Macroeconomics
-Microeconomics: The study of the choices that individuals and businesses make, the way these
choices interact in markets, and the influence of governments
-Macroeconomics: The study of the performance of the national economy and the global
- 2 big questions summarize the scope of economics:
How do choices end up determining what, how and for whom goods and services are
Do choices made in the pursuit of self-interest also promote the social interest?
-Goods: Physical objects/ products ie. Cellphones, automobiles
-Services: Tasks performed for people ie. Cellphone service, autorepair
- Varies across countries and changes over time
- In Canada today, agriculture accounts for 2% of total production, manufactured goods for 20%,
and services for 78%.
- In China today, agriculture accounts for 10% of total production, manufactured goods for 45%
and services for 45%.
- Described by the technologies and resources that we use
-Factors of Production: The resources used to produce goods and services
Land, Labour, Capital, Entrepreneurship
-Land: The “gifts of nature” that we use to produce goods and services
Synonymous with Natural Resources
Land in the everyday sense together with minerals, oil, gas, coal, water, air, forests, fish
Land surface and water resources are renewable, and some mineral resources can be
recycled, but resources used to create energy are non-renewable
-Labour: The work time and work effort that people devote to producing goods and services
Includes physical and mental efforts of all people that work on farms and construction
sites and in factories, shops, and offices
Quality of labour depends on human capital
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