Textbook Notes (369,205)
United States (206,227)
Economics (213)
01:220:102 (140)
Chapter 1

Chapter 1 What is Economics Outline Notes

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Erin Fairweather

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TwoBig EconomicQuestions Sunday,February17, 2013 4:05 PM • Definitionof Economics ○ Scarcity-inabilitytosatisfyall wants ○ Incentive-rewardthat encourages an action or penalty that discourages one ○ Economics-social sciencethatstudies thechoices that individuals,businesses,governments, and entire societies makeas they cope with scarcityand the incentives thatinfluence and reconcile those choices  Microeconomics-studyof thechoices that individuals and businesses make,the way these choices interact in markets, and the influenceof governments  Macroeconomics-studyof theperformance of the national economy and the global economy • TwoBig Economic Questions ○ What,How, and For Whom?  What? □ Whatis being produced?  How? □ Goods and services areproduced by using productive resources that is calledfactorsofproduction-Land,Labor,Capital,Entrepreneurship  Land-natural resources used to produce goods and services  Labor-worktime and work effort that people devote to producing goods and services ◊ includes physical andmental efforts of all the people who work on farms and construction sites andin factories,shops,and offices ◊ Qualityoflabor depends on human capital-knowledge and skill thatpeople obtain from education, on-the-job training, and work experience  Capital-tools,instruments, machines, buildings,and other constructions that businesses usetoproduce goods and services  Entrepreneurship-humanresource that organizes labor, land, and capital ◊ Comeup with new ideas about what and how to produce, make business decisions,andbear the risks that arisefrom these decisions  For Whom? □ Who consumes the goods and services thatare produced depends on the incomes that people earn □ Peopleearn their incomes by selling theservices of the factors of production they own:  Landearn
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