1. What is Economics?

2. Scarcity and Choice
 Need –is something like air, food, or shelter that
is necessary for survival
 Want- is an item that we desire but that is not
essential to survival
 Economics- is the study of how people seek to
satisfy their needs and wants by making choices

3. Scarcity
 Goods – are physical objects such as shoes and
shirts
 Services – are actions or activities that one
person performs for another.

4. Scarcity Vs. Shortages
 Scarcity  Shortages
 Implies limited quantities  A situation in which a
of resources to meet good or service is
unlimited wants unavailable.
 While someone may be  Ex. Droughts can also
able to buy hundreds of create shortages that last
baseballs no one can for many years.
have endless supply.
Sooner or later a limit is
reached

5. Factors of Products
 Land
 Labor
 Capital

6. Land
Any effort a person devotes to
A task for which that person is paid

7. Labor
Any effort a person devotes to
A task for which that person is paid

8. Capital
Any human-made resource that is used
To create other goods and services
- Physical capital – all human made goods that are used to produce
other goods and services; tools and buildings
- Human Capital – is the knowledge and skills a worker gains
through education and experience

9. Entrepreneurs
 Are ambitious leaders who decide how to
combine land, labor, and capital resources to
create new goods and services.

10.  http://www.forbes.com/2009/07/17/google-
bing-research-entrepreneurs-sales-marketing-
lewis.html

11. Section 2
Opportunity Cost
 Trade offs
 Guns or butter
 Opportunity cost
 Thinking at the margin

12. Trade-offs
 Are all the alternatives that we give up whenever
we choose one course over another.