learning objectives: the economic problem lo1: understand the relevance of economics lo2: define...
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Learning Objectives:
The Economic Problem
LO1: Understand the relevance of economics
LO2: Define economics, microeconomics, and macroeconomics and understand the importance of the scientific method
LO3: Realize that scarcity, choice, and opportunity cost are at the heart of economics and that efficiency is a cornerstone
CHAPTER 1
1-1© 2012 McGraw-Hill Ryerson Limited
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Scarcity and Choice
Resources are Scarce: – Resources, or “factors of production”, are
anything used to produce goods and services
– Do not have enough resources to produce everything everybody wants
–Must have some way to ration scarce resources
1-2© 2012 McGraw-Hill Ryerson Limited
LO3
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Economic Resources
Labour - Human mental and physical effort
Land – Any natural resource used to produce goods or services
Capital – Tools, equipment, factories, and buildings used in production process
Enterprise – The human resource that innovates and takes risks
1-3© 2012 McGraw-Hill Ryerson Limited
LO3
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Economic Resources
1-4© 2012 McGraw-Hill Ryerson Limited
RESOURCE: EARNS:
Labour Wages
Land Rent
Capital Interest
Enterprise Profit
LO3
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Self-Test
1-5© 2012 McGraw-Hill Ryerson Limited
Indicate whether the resource in question is labour (L), capital (K), land (N), or enterprise (E):
a. A bar-code scanner in a supermarket b. Fresh drinking water c. Copper deposits in a mine d. The work of a systems analyste. The first application of e- technology to an
economics textbookf. An office building
LO3
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Economic Resources
Technology - Method of production - Way in which resources are combined to produce
goods and services
Opportunity Cost - The value of the next-best alternative that is given
up as a result of making a particular choice
1-6© 2012 McGraw-Hill Ryerson Limited
LO3