Summary

Summary - ECON1002a

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Course
ECON1002a

Institution
University Of The Witwatersrand (wits)

Summary of Chapter 1. Everything you need to know in order to answer and pass all Chapter 1 related questions in the exam. Including post hoc fallacy, opportunity cost, factors of production, ceteris paribus etc.

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Uploaded on June 17, 2024
Number of pages 4
Written in 2023/2024
Type Summary

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Institution
University of the Witwatersrand (wits)
Course
ECON1002a

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CHAPTER 1: Limits, alternatives and choices

Scarcity and choice.

• Limited goods and services

• Limited time

Economics

• It is the study of how people, organisations, and businesses make social decisions to
maximise their degree of enjoyment in times of shortage.

• A punishment or a reward could be used as an incentive.
• The primary source of economic issues is scarcity.
• The best way to describe economics is as the study of how individuals, organisations,
governments, and societies come to decisions about scarcity.
• Economists note that both the wealthy and the impoverished must deal with scarcity.
• Economics is the study of the decisions we make in response to scarcity.
• Scarcity is a notion that pertains to both money and time.
• People must make decisions because of scarcity.

Examples of microeconomics.
• The causes of the average price increase
• The individual consumer's purchasing decisions.
• Researching how prices are set in specific markets.
• An examination of how various decision-making units behave.
• The effect rent caps have on the availability of units.
• How a higher cigarette tax affects the sale of cigarettes.
• The choices a company makes regarding recruiting.

The difference between microeconomics and macroeconomics
• Macroeconomics examines the decisions made by businesses and individuals, while
microeconomics focuses on the overall state of the national economy.

Examples of macroeconomics.

• The impact of federal budget deficits on interest rates. how raising the money supply
• affects inflation.
• Total employment across the country.

Examples of answering economic questions
• An economy responds to the "what" question when it creates more homes and fewer
typewriters.
• Businesses in an economy are responding to the "what" issue when they begin
manufacturing more computers and fewer televisions.
• As petrol prices climb, American automakers choose to create more compact cars and
fewer SUVs. Producers respond to the "what" query.
• An example of a "what" question is "Should movies or compact discs be produced?"
• More services than goods are produced in the US.

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