ECON 261 Chapter 1 Notes
ECON 261 Chapter 1 Notes Econ 261 macroeconomics
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This 3 page Class Notes was uploaded by Tori Bender on Sunday January 24, 2016. The Class Notes belongs to Econ 261 macroeconomics at Northern Illinois University taught by Manjuri Talukar in Spring 2016. Since its upload, it has received 86 views. For similar materials see Macroeconomics in Economcs at Northern Illinois University.
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Date Created: 01/24/16
Chapter 1 Notes, ECON 261 What Economics is about 1.2A Definition of Economics Good: Something that gives someone a utility Utility: Satisfaction Examples of Goods: electronics, pools, a significant other Bad: Something that gives someone a disutility Disutility: Dissatisfaction Examples of Bads: illness, injury, financial trouble Things can be both good and bad! An Example) If one person likes eating strawberries and their friend is allergic to them, then strawberries would be a good to one person and a bad to their friend. Resources: Something that produced goods and or services There are four categories of resources these are: Land: Natural Resources Ex) animals, oil, gas, etc. Labor: Physical and or intellectual capability brought to a process Ex) someone fixes your window screen they put time and effort into fixing it Capital: Goods that can output other goods Ex) factories, money (only in finance) Entrepreneurship: Talent had by someone for organization of resources Ex) Business tycoons Bartering: Trading goods for services Resources are limited Wants are unlimited Resources have alternative uses Scarcity: when demand is higher than the supply Want for a resource can be infinite while the resource itself is finite Economics and Scarcity go hand in hand. Without one there would not be the other. Eco: Meaning: Home or household Nomos: Meaning: Management So the root of economics means household management Economics: The science behind the idea of scarcity. How society handles how scarcity affects them Budgeting would not be necessary if we had access to unlimited funds or resources. We need to budget since our world is filled with scarcity. There are three scarcity effects: 1) the need of choice making, 2) need for rationing devices, and 3) competition. Choice: Since scarcity is wanting more than there is to have people must decide what they NEED instead of what they WANT, and in turn people must accept dissatisfaction. Rationing Device: A way to decide who gets what from the available resource Ex) price of product Competition: People compete for the limited resources. Or the people even compete for more of the rationing device. For example, people every day compete for jobs, acceptance into college, and even for the highest grades. 1.3Key Concepts Opportunity Cost: When a choice is made, you take the more valued opportunity or forfeit the alternative Because resources have alternative uses using said resource in only one way means giving up something else. This is what opportunity cost means. An Example) You can either go to class or take a nap. These are alternative uses of time. Opportunity cost is when you go to class and do not nap which gives up your alternative. Marginal issues are non all or nothing choices Do I work or not work? VS. Do I work for five hours or seven hours? The pink highlight indicates the all or nothing choice, and the dark blue highlight indicates the marginal choice. Relative price: The price of a good and or service comparatively to another good and of service
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