Summary
Summary ECO101H1 Week 1
- Course
- ECO101H1 (ECO101)
- Institution
- University Of Toronto (U Of T )
Summary of 4 pages for the course ECO101H1 at U of T (Week 1 notes)
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Chapter 1&2 Notes1.1 what is economics?
➔ Due to the fact that we do not have the supplies of resources that we need to meet the
desires of every individual and the world we have scarcity
➔ In other terms scarcity is the inevitable And is Central to all economics and all economic
problems
➔ Society's resources are divided into labour, land, capital, also known as Factors of
production
◆ Land includes all natural endowments such as arable land, forests, Lakes
◆ Labour includes all mental and physical Human Resources including
entrepreneurial capacity and management skills
◆ Capital includes all manufactured aids to production, such as tools, machinery,
and buildings
➔ Scarcity implies the need for choice, so Choice implies the existence of cost
➔ The choice to buy something means to have less of something else so basically if you
choose to buy something the cost of the more of one thing is the amount that we must
give up
➔ Opportunity cost is the value of the next best alternative that is forgone when one
alternative is chosen
➔ The production possibilities boundary is a curve that shows us numerous amounts of
combinations of output that can be attained if all available resources are used efficiently
➔ any point on the curve would mean that every resource is being used efficiently and
there's a chance to make profits
➔ any point to the right of the curve is unattainable because in order to make more of
something you must simply give up something else
➔ any point to the left of the curve would mean that you are working and efficiently
because you are not using 100% of your resources
➔ The curve illustrates 3 Concepts scarcity, choice, and opportunity cost
➔ scarcity is indicated by the unattainable combinations outside the Curve
➔ choice is indicated by the need to choose among the alternative attainable options along
the boundary
➔ an opportunity cost by the negative slope of the boundary which means in order to get
more of something you must give up something else
➔ Resource allocation the decisions to move around you resources to use them most
efficiently which raises the question what determines which goods are produced and
which ones are not?
➔ When it comes to consumption and distribution of a nationals total output, we must also
keep global trades in mind. Will the economy consume exactly the same goods that it
produces? Or will the global trade be making a difference to the numbers?
➔ It is sometimes possible for the production to lie idle in which case the economy would
be functioning inefficiently, inside the PPF curve
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