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ECON 1000 Cha. 1 Notes.docx

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ECON 1000
Sadia Mariam Malik

ECON Cha. 1 Jot Notes - Your choices must be made consistent with the choices of others (ex. you want to buy a laptop, someone must choose to sell a laptop) - Incentives reconcile choices (ex. prices high or low) - 2 big economic questions: 1) what, how, and for whom goods and services are produced? 2) can the choices people make of self-interest also promote social interest? What we produce: - 2% agriculture, 20% manufacture goods, 78% services in Canada - 10% agriculture, 46% manufacture goods, 44% services in China How do we produce goods/services: - Factors of production; land (natural resources), labour, capital, entrepreneurship - Land surface, water, and some minerals are renewable/recycled, but resources to create energy is non-renewable - The quality of labour depends on human capital - 93% of Canadians have high school degree, 23% of university degree, and 40% have some post secondary degree - Capital is the tools, instruments, machines, buildings, and other constructions that businesses use to produce goods and services. (financial capital is not a productive resource, because it is not used to produce goods/services) - Entrepreneurship: the human resource that organizes labour, land, and capital For whom do we produce: - People earn income by selling the services of the factors of production they own; land earns rent, labour earns wages, capital earns interest, entrepreneurship earns profit - Labour earns the most income (70% of total income) - People in the richest 20% earn more than 10x the income of those in the poorest 20% Social interest - The social interest has 2 dimensions: efficiency, and equity (fairness) - Efficiency is achieved when resources are used to produce goods and services at the lowest
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