ECON 201 Ch14
Note Book
Chapter 1 Getting Started
1.1 DEFINITION AND QUESTIONS
1. Scarcity is the condition that arises because wants exceeds the ability of resources to satisfy them.
2. Scarcity is the condition that arises because wants exceed the ability of resources to satisfy them.
Scarcity is not eliminated when people become rich, movie goers are able to see the next The Social Networ installment, or people gain employment because of the movie’s release.
In all cases, people will have wants that cannot be satisfied.
3. Economics is the social science that studies the choices that individuals, businesses, governments, and entire societies make as they cope with scarcity, the incentives that influence those choices, and the arrangements that coordinate them.
4. Microeconomics: The study of the choices that individuals and businesses make and the way these choices interact and are influenced by governments.
5. Macroeconomics: The study of the aggregate (or total) effects on the national economy and the global economy of the choices that individuals, businesses, and governments make.
6. Goods and services are the objects (goods) and actions (services) that people value and produce to satisfy human wants.
7. What goods and services get produced and in what quantities?
8. How are goods and services produced?
9. For Whom are the various goods and services produced?
10. The choices that are best for the individual who makes them are choices made in the pursuit of self-interest.
11. The choices that are best for society as a whole are choices made in the social interest.
1.2 THE ECONOMIC WAY OF THINKING
1. Economic Ideas:
a. Choice is a tradeoff
i. A tradeoff is an exchange—giving up one thing to get something else.
b. People make rational choices
i. A rational choice is a choice that uses the available resources to best achieve the objective of the person making the choice. ii. We make rational choices by comparing costs and benefits. iii. You make a
Chapter 1 Getting Started
1.1 DEFINITION AND QUESTIONS
1. Scarcity is the condition that arises because wants exceeds the ability of resources to satisfy them.
2. Scarcity is the condition that arises because wants exceed the ability of resources to satisfy them.
Scarcity is not eliminated when people become rich, movie goers are able to see the next The Social Networ installment, or people gain employment because of the movie’s release.
In all cases, people will have wants that cannot be satisfied.
3. Economics is the social science that studies the choices that individuals, businesses, governments, and entire societies make as they cope with scarcity, the incentives that influence those choices, and the arrangements that coordinate them.
4. Microeconomics: The study of the choices that individuals and businesses make and the way these choices interact and are influenced by governments.
5. Macroeconomics: The study of the aggregate (or total) effects on the national economy and the global economy of the choices that individuals, businesses, and governments make.
6. Goods and services are the objects (goods) and actions (services) that people value and produce to satisfy human wants.
7. What goods and services get produced and in what quantities?
8. How are goods and services produced?
9. For Whom are the various goods and services produced?
10. The choices that are best for the individual who makes them are choices made in the pursuit of self-interest.
11. The choices that are best for society as a whole are choices made in the social interest.
1.2 THE ECONOMIC WAY OF THINKING
1. Economic Ideas:
a. Choice is a tradeoff
i. A tradeoff is an exchange—giving up one thing to get something else.
b. People make rational choices
i. A rational choice is a choice that uses the available resources to best achieve the objective of the person making the choice. ii. We make rational choices by comparing costs and benefits. iii. You make a