What is Economics?. Chapter 1 Notes. Economics. Economics is a social science that studies how people, acting individually or in groups, decide how to use scarce resources to satisfy their wants . Economist Alfred Marshall stated that economics is about the “ordinary business of life.”
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Chapter 1 Notes
1. Natural resources - unaltered gifts of nature (soil, minerals, timber, water, etc)
2. Human resources (or labor) – the physical & mental efforts people use to create goods & services
3. Capital resources – buildings, tools, machines people create & use to produce final goods & services
4. Entrepreneurship – is the imagination, innovative thinking & management skill needed to start & operate a business
Entrepreneurs are willing to take risks in the hope of making a profit
Resources are important to the success of a
business & to the U. S. economy
“…is a method…an apparatus of the mind, a
technique of thinking.”
4. People respond to incentives
5. People gain when they trade voluntarily
6. Choices are future-oriented
7. Our choices are influenced by the choices of others
8. Applying the economic way of thinking
(As long as the benefit or profit exceeds the costs, they will continue to produce)
1. What goods & services to produce?
2. How should goods & services be produced?
3. For whom will goods & services be produced?
1. Examines the “big picture.”
2. Unemployment, production level of a country, inflation, poverty, long-term economic growth
1. Examines the choices that individuals, families & businesses make
2. How much to charge for an event, Employee wages, advertising campaign, etc.,