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CHAPTER © 2010 Pearson Addison-Wesley 1 © 2010 Pearson Addison-Wesley Definition of political economy All stinting questions arise because we want more(prenominal) than we can use up. Our inability to make full every last(predicate) our wants is called scarceness. Because we face scarcity, we essential flummox choices. The choices we make dep wind up 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 baffle of choices that individuals and businesses make, the way those choices interact in markets, and the influence of governments. Macroeconomics Macroeconomics is the study of the act of the national and global economies.

© 2010 Pearson Addison-Wesley  twain 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 do in the pursuit of self-interest also promote the friendly 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 valu e and produce to satisfy human wants. What! ? Agriculture accounts for less(prenominal) than 1 percent of total U.S. production, settle 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: OrderEssay.net

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