Econ 100 1st Edition Lecture 1 Outline of Current Lecture I Economics A Microeconomics vs Macroeconomics II Two Big Economic Questions A What how and for whom 1 Factors of Production B Self Interest vs Social Interest 1 Efficiency 2 Equity Current Lecture Economy The one who manages households The study of choices and their consequences We want more than we can get Our inability to satisfy all we want scarcity Because of scarcity we must make choices Choices depend on incentives a reward that encourages an action or a penalty that discourages an action 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 influences and reconcile those choices Microeconomics individuals and businesses and their choices the way these choices interact in markets and the influence of governments Macroeconomics performance of the national economy and the global economy Two Big Economic Questions 1 How do choices end up determining what how and for whom goods and services are produced Goods Services objects that people value and produce to satisfy human wants What Percent of total production agriculture services goods How Goods services are produced using productive resources called factors of production Land natural resources 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 Labor effort of humans quality depends on knowledge skill experience human capital Capital tools businesses use to produce goods services Entrepreneurship human resource that organizes land labor and capital For whom Depends on individuals income Land earns rent Labor earns wages most income Capital earns interest Entrepreneurship earns profit 2 Does the pursuit of self interest unintentionally promote the social interest People make choices to pursue self interest Social interest benefits society as a whole Efficiency resource use is efficient if it is not possible to make someone better off without making someone else worse off Equity fairness variety of views about what is fair does social interest require fair shares