ECON-101 Lecture Notes - Lecture 2: Physical Capital, Human Capital, W. M. Keck Observatory
2 Mar 2016
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What is economics? how society (you, families, gov"t) allocates limited resources to satisfy unlimited wants. When resources are limited you must priorities wants (wants > resources) What are the limited resources (l. r) in economics? (5) Land: natural resources (mountains, forestry, oil, gas, etc. ) 2: physical capital: equipment, machinery, tools, etc. things used in production, human capital: education, training, etc. experience, entrepreneurial ability: (bill gates, buffet, etc. ) Entrepreneurs hires (1-4) in order to produce a good/service. Takes risk, you can make profit or lose money. *based on above many consider economics as a social science. Ceteris paribus: the lower the price, the greater the quantity demanded. Economic models: 2 types: circular flow of income (pg. Assumptions: there are 2 markets (limited resources (l. r), finished goods, there are 2 participant"s households (consumers), firms (businesses) *the market is a cycle if the flow of money is lower in one section it will affect the rest of the cycle.
