ECONOMICS 103
, Introduction
incentive a reward that encourages an action or a
penalty
that discourages an action
·
scarcity inability to satisfy all our wants ,
caused by limited
resources and unlimited human wants
choices trade-off
good tangible
service intangible
natural resources
land "gifts of nature" that we use to produce goods & services
·
labour the work time and work effort that people devote to
producing goods a services
human being quantity +
influenced by governmental a societal
laws on labour (age & gender wise (
quality
- education ,
skills ,
health , on-the-job training ,
work experience
·
As countries go richer (high-income) ,
services are much more produced
·
capital the tools , instruments ,
machines , buildings ,
and other
constructions that businesses use to produce goods & services
Entrepreneurship the human resource that organizes land ,
labour
,
and capital
"is a mindset"
, Land (landlords) earns rent
Labour (employees) earns certain upfront
Wages
,
·
Capital (banks) earns interest
Entrepreneurship (entrepreneurs) earns profit residual
"Whatever is left ,
it is yours"
positive
can be zero
negative
·
Self-Interest you make choices that are in your self-interest choices
that you think are best for you
·
Social Interest choices that are best for society as a whole are said
to be in the social interest
Social interest has z dimensions :
1
Efficiency
2
Equity
Individual Transferable Quota (ITQ) the fish in the sea
·
Fairness is subjective
a topics that generate discussions illustrating tension between
self-interest and social interest :
·> Globalization
·> Information -
age monopolies
·
> Global warming
·
> Economic instability
, ·
Globalization the expansion of international trade , borrowing and
lending and investment
,
·
Marginal benefit the benefit of doing something one more time
the benefit from pursuing an incremental increase
in an activity
·
Marginal cost the cost of doing something one more time
the opportunity cost of pursuing an incremental
increase in an activity
MB MC
Cideally (
6 key ideas in economic way of thinking :
·> a choice is a trade-off
·
people make rational choices by comparing benefits and costs
· benefit is what you gain from something
· cost is what you must give up to get something
· most choices are "how-much" choices made at the margin
· choices respond to incentives
A CHOICE IS A TRADE-OFF
places scarcity and its implication ,
choice ,
at center stage
·
MAKING A RATIONAL CHOICE
a rational choice a choice that compares costs and benefits
and achieves the benefit cost
greatest over
for the person making the choice
, Introduction
incentive a reward that encourages an action or a
penalty
that discourages an action
·
scarcity inability to satisfy all our wants ,
caused by limited
resources and unlimited human wants
choices trade-off
good tangible
service intangible
natural resources
land "gifts of nature" that we use to produce goods & services
·
labour the work time and work effort that people devote to
producing goods a services
human being quantity +
influenced by governmental a societal
laws on labour (age & gender wise (
quality
- education ,
skills ,
health , on-the-job training ,
work experience
·
As countries go richer (high-income) ,
services are much more produced
·
capital the tools , instruments ,
machines , buildings ,
and other
constructions that businesses use to produce goods & services
Entrepreneurship the human resource that organizes land ,
labour
,
and capital
"is a mindset"
, Land (landlords) earns rent
Labour (employees) earns certain upfront
Wages
,
·
Capital (banks) earns interest
Entrepreneurship (entrepreneurs) earns profit residual
"Whatever is left ,
it is yours"
positive
can be zero
negative
·
Self-Interest you make choices that are in your self-interest choices
that you think are best for you
·
Social Interest choices that are best for society as a whole are said
to be in the social interest
Social interest has z dimensions :
1
Efficiency
2
Equity
Individual Transferable Quota (ITQ) the fish in the sea
·
Fairness is subjective
a topics that generate discussions illustrating tension between
self-interest and social interest :
·> Globalization
·> Information -
age monopolies
·
> Global warming
·
> Economic instability
, ·
Globalization the expansion of international trade , borrowing and
lending and investment
,
·
Marginal benefit the benefit of doing something one more time
the benefit from pursuing an incremental increase
in an activity
·
Marginal cost the cost of doing something one more time
the opportunity cost of pursuing an incremental
increase in an activity
MB MC
Cideally (
6 key ideas in economic way of thinking :
·> a choice is a trade-off
·
people make rational choices by comparing benefits and costs
· benefit is what you gain from something
· cost is what you must give up to get something
· most choices are "how-much" choices made at the margin
· choices respond to incentives
A CHOICE IS A TRADE-OFF
places scarcity and its implication ,
choice ,
at center stage
·
MAKING A RATIONAL CHOICE
a rational choice a choice that compares costs and benefits
and achieves the benefit cost
greatest over
for the person making the choice
