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CHAPTER © 2010 Pearson Addison-Wesley 1 © 2010 Pearson Addison-Wesley Definition of political economy All economic questions arise because we want more(prenominal) than we can depart. Our inability to punish all our wants is called scarceness. Because we face scarcity, we essential make choices. The choices we make dep exterminate on the incentives we face. An incentive is a reward that encourages an action or a penalty that discourages an action. © 2010 Pearson Addison-Wesley Definition of economicals economicals is the sociable science that studies the choices that individuals, businesses, governments, and entire societies make as they cope with scarcity and the incentives that influence and reconcile those choices. political economy divides in to main separate: ? Microeconomics ? Macroeconomics © 2010 Pearson Addison-Wesley Definition of Economics Microeconomics Microeconomics is the school of choices that indiv iduals and businesses make, the way those choices interact in markets, and the influence of governments. Macroeconomics Macroeconomics is the study of the effect of the national and global economies.

© 2010 Pearson Addison-Wesley  devil Big Economic Questions Two big questions summarize the scope of economics: do choices end up determining what, how, and for whom goods and run get produced? ? How do choices make in the pursuit of self-interest also promote the kind interest? ? When © 2010 Pearson Addison-Wesley Two Big Economic Questions What, How, and For Whom? Goods and services atomic number 18 the objects that people value and produc! e to satisfy human wants. What? Agriculture accounts for less(prenominal) than 1 percent of total U.S. production, contrive goods for 20 percent, and services for 80 percent. In China, agriculture accounts for 10 percent of total production, manufactured goods for 50 percent, and services for 40 percent. © 2010 Pearson Addison-Wesley Two Big Economic Questions Figure 1.1 shows...If you want to get a full essay, value it on our website: BestEssayCheap.com

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