etar lecture notes - 1a
DESCRIPTION
Unit 1-ATRANSCRIPT
What is ECONOMICS
?
Scarcity
A situa(on in which
the amount of something available is insufficient
to sa(sfy the desire for it.
HUMAN NEEDS AND WANTS
Basic Needs
Those that are essential to life.
Engel’s Law
• Engel's Law states that as income rises, percentage of income spent on consump(on rises slower as compared to rise in income.
Needs Essen(al to Decent and Comfortable Living
Those that are not essential to life, but would make it more enjoyable.
Luxury
Those that are neither basic nor essential to decent and comfortable living.
Public Needs
Private Needs
The labor, capital, land and natural resources, and entrepreneurship that are used to produce goods and services.
LABOR
The time human beings spend producing goods and services.
CAPITAL
• A long las(ng tool that we produce to help us make other goods and services.
• Two different types: PHYSICAL and HUMAN • The capital stock is the total amount of capital at a na(on’s disposal at any point in (me. It consists of all physical and human capital made in previous periods that is s(ll produc(vely useful.
Physical Capital
• The part of the capital stock consis(ng of physical goods, such as machinery, equipment and factory buildings, computers, and even hand tools like hammers and screwdrivers.
• These are all long las(ng physical goods that are used to make other things.
Human Capital
Consists of the skills and knowledge possessed by workers.
LAND
The physical space on which produc(on takes place, as well as useful materials – natural resources – found under it or on it, such as crude oil, iron, coal, or fer(le soil.
Entrepreneurship • The ability (and the willingness to use it) to combine the other resources into a produc(ve enterprise.
• An entrepreneur may be an innovator who comes up with an original idea for a business or a risk taker who provides his own funds or (me to nurture a project with uncertain rewards.
RESOURCES vs. INPUTS
• Input is anything (including a resource) used to produce a good or service.
• Inputs include not only resources but also many other things made from them (cement, rolled steel, electricity), which are, in turn, used to make goods and services.
• Resources, by contrast, are the special inputs that fall into one of four categories: labor, land, capital, and entrepreneurship.
DOUGLASS NORTH
• Douglass Cecil North (born November 5, 1920);
• An American economist known for his work in economic history;
• Co-‐recipient (with Robert William Fogel) of the 1993 Nobel Memorial Prize in Economic Sciences.