Econ

• Economics


  The social science that studies the choices that individuals, businesses, governments, and entire societies make as they cope with scarcity and the incentives that influence and reconcile those choices
• Main parts of economics

  • Microeconomics
  • Macroeconomics
• Microeconomics


  The study of choices that individuals and businesses make, the way those choices interact in markets, and the influence of governments
• Macroeconomics

  The study of the performance of the national and global economies
• Two big questions in economics

  • How do choices end up determining what, how, and for whom goods and services get produced?
  • When do choices made in the pursuit of self-interest also promote the social interest?
• Goods and services

  The objects that people value and produce to satisfy human wants
• Agriculture accounts for less than 1 percent of total U.S. production, manufactured goods for 20 percent, and services for 80 percent
• In China, agriculture accounts for 10 percent of total production, manufactured goods for 50 percent, and services for 40 percent
• Factors of production

  • Land
  • Labor
  • Capital
  • Entrepreneurship
• Land

  The "gifts of nature" that we use to produce goods and services
• Labor


  The work time and work effort that people devote to producing goods and services
• Human capital


  The knowledge and skill that people obtain from education, on-the-job training, and work experience
• Capital


  The tools, instruments, machines, buildings, and other constructions that businesses use to produce goods and services
• Entrepreneurship


  The human resource that organizes land, labor, and capital
• Land earns rent, labor earns wages, capital earns interest, and entrepreneurship earns profit
• An outcome is in the social interest if it uses resources efficiently and distributes goods and services fairly
• Tradeoff


  An exchange, giving up one thing to get something else
• Opportunity cost


  The highest-valued alternative that we give up to get something