What is economics unit1week1

Scarcity and the Science of Economics,[object Object],“We witness scarcity with each year’s “hot” new product.”,[object Object],What is Economics?,[object Object]
Fundamental Economic Problem,[object Object],Scarcity: Condition where unlimited human wants face limited resources.,[object Object],Effects almost every decision we make.,[object Object]
The study of how people try to satisfy wants with scarce resources.,[object Object],Economics,[object Object],Economics is about scarce resources, consumption and production. How many "economic elements" can you identify in the picture above?,[object Object]
Needs and Wants,[object Object],Need: Required for survival.,[object Object],[object Object],[object Object]
Three Basic Questions,[object Object],What To Produce: A society must choose based on its needs.,[object Object],How To Produce: Society must choose based on its resources.,[object Object],For Whom to Produce: Society must choose based on its population and other available markets.,[object Object]
Land: Limited natural resources not created by humans (climate, fresh water, vegetation, minerals, animals),[object Object],Capital: Means by which something is produced (money, tools, equipment, machinery, and factories).,[object Object],Factors of Production,[object Object]
Labor: Workers who apply their efforts, abilities, and skills to production.,[object Object],Entrepreneur: Risk-takers who combine the land, labor, and capital into new products.,[object Object],Factors of Production, continued,[object Object]
When all the factors of production are present, PRODUCTION, or the process of creating goods and services, takes place.,[object Object],Production,[object Object]
Describes economic activity- Gross Domestic Product (GDP), unemployment rate, government spending, tax rates…,[object Object],Analyzes economic activity and answers the “why’s” and “how’s”-why prices go up and down, or how do taxes affect savings.,[object Object],The Scope of Economics,[object Object]
Economists offer an explanation of the economy and its activities to the society’s population. ,[object Object],Prediction: We want to know what’s around the corner to better prepare ourselves for the unknown.,[object Object],Will prices rise or fall?,[object Object],Will income increase or decrease?,[object Object],Economics is a social science because it looks at the decisions people make and how they react to those decisions.,[object Object],The Scope of Economics, continued,[object Object]
Basic Economic Concepts ,[object Object],“20% of the world’s people who live in the wealthiest nations consume 86% of the world’s goods and services.  The 20% who live in the poorest nations consume only 1.3%”,[object Object],Section 2,[object Object]
Goods: Item that is economically useful or satisfies an economic want.,[object Object],Consumer good: Intended for final use by individuals,[object Object],Capital goods: Manufactured goods which are used to produce other goods and services.  Ex.?,[object Object],Durable goods: Any product that lasts longer than 3 years when used on a regular basis. Ex?,[object Object],Nondurable goods: Any product that lasts less than 3 years when used on a regular basis. Ex?,[object Object],Goods, Services, Consumers,[object Object]
Services: Work that is performed for someone and intangible.,[object Object],Consumers: A Person who uses goods and services to satisfy wants and needs.,[object Object],Why do you think the U.S. has been described as a “society of consumption”?,[object Object],Goods, Services, Consumers,[object Object]
Value: A worth that can be expressed in dollars and cents.,[object Object],Scarcity by itself is not enough to create value.  For something to have value, it must also have utility.,[object Object],Value, Utility, and Wealth,[object Object]
Utility: Provide satisfaction, which varies with the needs and wants of each person.,[object Object],Utility,[object Object]
Wealth,[object Object],The accumulation of goods that are tangible, scarce, useful, and transferable from one person to another.,[object Object],A nation’s wealth is comprised of all items, including natural resources, factories, etc.,[object Object],Does not include services!!,[object Object]
Adam Smith’s 1776 book, The Wealth of Nations, referred specifically to the ability and skills of a nation’s people as a source of its wealth.,[object Object],Advocated a free market economy as more productive and more beneficial to society. Comments? Criticisms?,[object Object],Wealth, continued,[object Object]
The Circular Flow of Economic Activity,[object Object],Wealth that is generated by the economy is made possible by a circular flow of economic activity.,[object Object]
The Market,[object Object],Factor Markets,[object Object],Individual’s earned income,[object Object],Focus on the four factors of production: land, labor, capital, entrepreneurship,[object Object],Product Markets,[object Object],Individual’s spending place,[object Object],Focus on goods and services,[object Object]
Circular Flow Chart,[object Object]
Productivity,[object Object],Measure of the amount of output produced by a given amount of input within a certain time,[object Object],Productivity increases with efficient use of scarce resources.,[object Object]
Specialization and Division of Labor,[object Object],May improve productivity because they lead to more proficiency (and greater economic interdependence),[object Object]
Economic Growth: Depends on high productivity,[object Object],An economy’s productivity may be affected by…,[object Object]
Economic Interdependence,[object Object],We rely on others, and others rely on us, to provide the goods and services that we consume.,[object Object]
Section 3: Economic Choices and Decision Making,[object Object],“Catch a man a fish, and you can sell it to him. Teach a man to fish, and you ruin a wonderful business opportunity.”,[object Object]
Trade-Offs,[object Object],Alternative Choices when making economic decisions,[object Object],Decision-making grid lists the adv./disadv of each choice.,[object Object]
Opportunity Cost,[object Object],The cost of the next best alternative among a person’s choices.,[object Object],The cost may be the money, time or resources a person gives up, or sacrifices, to make his/her final choice.,[object Object],Discussion Question:,[object Object],What are some important economic decisions you will be facing within the next 5 weeks? 5 months?  One year?  Five years?,[object Object]
Production Possibilities Frontier,[object Object],Diagram illustrating the concept of opportunity cost.,[object Object],It shows the various combinations of goods and/or services an economy can produce when all productive resources are fully employed.,[object Object],Identifying possible alternatives allows an economy to examine how it can best put its limited resources into production.,[object Object],Considering different ways to fully employ its resources allows an economy to analyze the combination of goods/services that lead to maximum output.,[object Object]
Horizontal Line (X-axis): 100 % annual Butter ProductionVertical Line (Y-axis): 100% annual Gun Production,[object Object],50 units of butter  will only cost 30 units of guns,[object Object],120 units  of guns will cost 50 units of butter,[object Object],Between pts A & B exists a near equal trade-off, which means a competition for resources,[object Object]
Production Possibilities continued,[object Object],Opportunity Costs: Expressed in terms of trade-offs, or in terms of things given up to get something else,[object Object],The Cost of idle resources: If some resources are not employed, it is difficult for any company, nation, or individual to reach its true potential,[object Object],Economic Growth: Any increase in resources and/or productivity causes the production possibilities frontier to move outward,[object Object]
Build simple models to analyze or describe actual economic situations.,[object Object],Employ Cost-Benefit Analysis: Compare the cost of an action to the benefits received (Ex. ?),[object Object],Baby Steps: Make decisions by taking small, incremental steps toward the final goal,[object Object],Thinking Like an Economist:Strategies that will help us make the best choices,[object Object]
Studying economics will help us know how the economy works on a daily basis.,[object Object],Helps us understand the Free Enterprise economy where consumers and privately owned businesses, not the government, make a majority of the economic decisions. ,[object Object],The Road Ahead,[object Object]
Helps us become better decision-makers, both in our personal and professional lives AND at the voting booth!!,[object Object],Economics for Citizens,[object Object]
Every time a choice is made, something is given up!,[object Object],Rational choice is taking the things with greater value and giving up those with lesser  value,[object Object],On an individual level, the choices are not so difficult…,[object Object],On the societal level, the choices may not be so easy to make…,[object Object],Making the Rational Choice,[object Object]
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