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Chapter 1-4

econ 1000 chapters 1-4

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York University
ECON 1000
Steven Edwards

Chapter 1 2 big questions of economics 1 How do choices end up determining what how and for whom goods and services are produced 2 Can the choices that people make in the pursuit of their own self interest also promote the broader social interest What those that people rationally choose to buy For whomDetermined by what is produced Economics The social science that studies the choices that people make as they cope with the scarcity of resources and the incentives that encourage or discourage their decisions to best satisfy wants and needsOr The study of mankind in the ordinary business of life Incentive Reward penalty to encourage or discourage an actionMicroeconomics study of choices that individuals and businesses make Many micro portions of the economy come together to create macroeconomics Macroeconomics study of the performance of national and global economy Needs life basics food clothing shelter human companionship neh Wants non basics everything Desires unattainable things beyond the scope of current availabilityHow Factors of production productive resources that produce goods and services Such asLand natural resources rentLabourphysical intellectual wagesCapital Constructions that are used to create goods and services interestEntrepreneurshipHR that invents innovates organizes resources makes decisions takes risks profitfinancial capital money stocks bonds is not a productive source but allows businesses to borrow money to buy physical resources Human capital knowledge and skill labour force people accumulate through education work experience etc 2 production approaches labour intensive or capital intensive Self interest using time and resources in the way that makes the most sense to the individual Social interestusing time and resources in the best way for society as a whole Efficiency is achieved when the available resources are used to produce goods and servicesAt the lowest possible price andIn quantities that give the greatest possible benefit Equity is fairness but economists have a variety of views about what is fair Tradeoff exchange giving up one thing for something else cant have both with the available resources choice tradeoff exchange Rational choice compares cost and benefit and makes the choice based on the highest benefit cost ratio
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