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WEEK 1.docx

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York University
ECON 1000
George Georgopoulos

WEEK 1: WHAT IS ECONOMICS? Economics - study of choices made by people, business, and government coping with scarcity and incentives Scarcity – inability to satisfy all of our wants Incentives – reward that encourages an action (price drop = more reason to buy) Microeconomics – choices made by individuals and business and the way they affect the market and influence the government Macroeconomics – studies national economy and global economy (inflation, taxes) TWO BIG ECONOMIC QUESTIONS: 1) How do choices end up determining what, how, and for whom goods/services are produced 2) How can choices made in the pursuit of self-interest also promote social interest? Good and Services – objects people value and satisfy human needs What we produce changes over time depending on trends and the society Goods are produced using productive resources (aka) factors of production, which includes:  Land (natural resources)  Labour (time and effort used to produce goods) Human capital is the knowledge and skills within your business  Capital (all the things needed to create something) Financial capital is the money you need to buy physical assets  Entrepreneurship (organization of land, labour, and capital) Self-interest- best choice available to you Social interest – the best choice for society; an outcome that uses resources efficiently and goods are distributed fairly among people Resources are considered to be used efficiently when good are produced at the lowest possible cost, and in quantities that give the greatest benefit Tradeoff – giving up one thing to get something else (education for national defense, labour for capital, partying for studying) Big tradeoff – tradeoff between equality and efficiency CHOICES BRING CHANGE How much of our income do we save? (Give up c
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