ECON 201 1st Edition Lecture 2 Outline of Last Lecture I. Course IntroductionII. Course ObjectiveIII. Course GoalIV. Book InformationOutline of Current Lecture I. Announcements and RemindersII. What Economics is All Abouta. Definition of scarcity b. Definition of economicsIII. Managing Scarce Resourcesa. Four questions of management IV. Economic Systemsa. Three types of economic systemsCurrent LectureI. Announcements and Reminders- Register the clicker by Monday, January 12 as this is when participation points will begin to count. - The Sapling Homework late policy is a loss of one letter grade per day (10%).- If experiencing Sapling technological problems, contact the support team at this email: [email protected]. If it is an economics question, you can contact Dr. Bueckman or the teaching assistants. - Lab 1 next week is on a Monday-Wednesday-Friday rotation. The first lab topic is the possibilities model and reviewing Sapling homework.II. What Economics is All AboutEconomics is all about making decisions when faced with scarcity. Scarcity is the limited nature of a society’s resources. The fact that resources are limited is a fundamental underlying assumption that economics runs on. There are two types of scarcity: relative scarcity and absolute scarcity. Relative scarcity means that resources are not available in a local area. Absolute scarcity means that resources are not available anywhere on Earth; this often has to do with finite resources. As a result of scarcity, there is a greater demand and a higher price. These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Every individual has insatiable wants and needs, which can lead to scarce resources. Economics is the study of how a society manages its scarce resources.III. Managing Scarce ResourcesThis is also known as “organizing economic activity”. Managing resources means determining four things: what to produce, how to produce, how much of something to produce, and who receives what is produced. An example of how to produce a good is to do it by using a labor-intensive process (hire people to produce it) or by using a capital-intensive process (use robots to produce it and use the money to make more robots).IV. Economic SystemsThere are three types of economic systems: traditional economy, command economy, and market economy. A traditional economy uses traditional practices to produce goods. This practice may not necessarily lead to efficiency. A command economy is an economy that is controlled by a small group of leaders who determine economic choices for a society. An example of this was the economy in place during the Soviet Union. A market economy is an economy based on supply and demand, and this is the one we will focus on most in class. An example of a market economy is the economy present in the United States. Characteristics of a market economic system are division of labor, specialization, economies of scale, and trade. Additionally Adam Smith, in his book The Wealth of Nations published in 1776, introduced the idea of an “invisible hand” to promote general economic
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