Pe intro to econ

UNIT #1,[object Object],PRACTICAL ECON,[object Object]

What is Economics?,[object Object],The social science that studies the choices people make as they try to satisfy their wants in a world of scarcity.,[object Object]

The Fundamental Economic Problem,[object Object],SCARCITY = tension between unlimited wants and the limited productive resources available for satisfying these wants,[object Object],Needs are required for survival ,[object Object],Wants are desired for satisfaction,[object Object]

How to make best use of limited productive resources to satisfy human wants,[object Object],Every Society must answer 3 questions,[object Object],1. What goods and services will be produced?,[object Object],2.Howare goods and services to be produced?,[object Object],3. For whom are goods and services to be produced?,[object Object]

Factors of Production (Productive Resources),[object Object],1. LAND / Natural Resources – “gifts of nature”, these are NOT created by human effort,[object Object],2. LABOR / Human Resources – human work effort both mental & physical,[object Object],3. CAPITAL – man-made goods used to produce other products,[object Object]

The Other Guy: Final Factor of Production,[object Object],4. Entrepreneur – risk takers who combine land, labor, and capital and turn them into new products,[object Object]

Role of the Entrepreneur ,[object Object],What do they do?,[object Object],Combine factors of production to create product,[object Object],Successful entrepreneurs attract other firms to the industry (this helps everyone!),[object Object],Search for profits = new products = competition = more production = lower prices for consumers (What’s this called?),[object Object]

Other Basic Economic Language,[object Object],Review Production Equation,[object Object],LAND + LABOR + CAPITAL = PRODUCT,[object Object]

Intangible,[object Object],can’t be touched / felt,[object Object],Services,[object Object],tasks that you pay other people to perform for you,[object Object],services are INTANGIBLE,[object Object],Tangible,[object Object],able to be touched,[object Object],Goods,[object Object],anything that satisfies a person’s wants & is TANGIBLE,[object Object],Durable - Used 3 + years and lasts,[object Object],Nondurable - Used 3 + years and does not last,[object Object],What’s the difference between consumer and capital goods???,[object Object]

Why would you buy that?,[object Object],Utility - is a good’s or service’s capacity to provide satisfaction or usefulness, which varies with the needs and wants of each person,[object Object],Disutility- is a good’s or service’s capacity to provide dissatisfaction (unhappiness),[object Object]

How do we assign value to products?,[object Object],Value is worth expressed in dollars and cents. For something to have value, it must be scarce and provide utility!,[object Object],Why is water worth so much less than diamonds? (Diamond-Water Paradox),[object Object]

How do we decide who gets which products?,[object Object],We use a rationing device, a way of allocating our products,[object Object],Our rationing device is price!!!,[object Object],Besides the price of items, what else influences who gets what?,[object Object]

Making Good Choices,[object Object],Without enough resources to satisfy our wants, we have to CHOOSE which wants we will satisfy,[object Object],Example:,[object Object],Maria earns $1000 a month. She wants a new outfit, 10 new books, a trip to Hawaii, a new car, and many other things.,[object Object],Maria can pay the price of all of these things but can’t have them all. She has a decision to make!,[object Object]

Economic Decision Making,[object Object],Trade-Off,[object Object],Trade-offs are the alternative choices people face in making an economic decision.,[object Object],To decide among our tradeoffs, we use cost/benefit analysis!,[object Object],Discussion – What are your tradeoffs of going to the next school dance?,[object Object],Opportunity Cost,[object Object],Opportunity cost is the cost of the next best alternative among a person’s choices. The opportunity cost is the money, time, or resources a person gives up, or sacrifices, to make his final choice.,[object Object],The OC,[object Object],Discussion – What is your opportunity cost of going to the school dance?,[object Object]

Review: Opportunity Cost,[object Object],Both producers (those who provide goods/services) & consumers (those who use goods/services) incur opportunity costs when making decisions,[object Object],Ex. Business owner of insurance company,[object Object],Ex. Consumer purchasing carpet,[object Object],There’s No Such Thing as a Free Lunch!,[object Object]

Economic Systems,[object Object],An economic system is the way a society coordinates the production and consumption of goods & services.,[object Object],How a society answers the three basic economic questions determines which type of economic system they are!,[object Object],Three Types of Economic Systems:,[object Object],Command,[object Object],Traditional,[object Object],Market,[object Object]

Circular Flow Model,[object Object],Model details the flow of money and goods in a market economy,[object Object],The factor market is where individuals sell their resources to businesses to gain income,[object Object],The product market is where individuals use their income to buy the goods & services businesses sell.,[object Object]

[object Object],Goods and,[object Object],Goods,[object Object],[object Object],services,[object Object],and services,[object Object],bought,[object Object],sold,[object Object],Individuals,[object Object],Businesses,[object Object],[object Object]

Produce and sellgoods and services,[object Object],goods and services,[object Object],[object Object]

Buy and use factorsof production,[object Object],of production,[object Object],Sell Factors,[object Object],Of Production,[object Object],FACTOR,[object Object],MARKET,[object Object],Buy Factors of,[object Object],production,[object Object],[object Object],Factor Payments,[object Object],[object Object],The Circular Flow of Economic Activity – Market Economy,[object Object],PRODUCT,[object Object],MARKET,[object Object],Consumer Spending,[object Object],Profit / Revenue,[object Object],Income,[object Object],= Flow of inputs ,[object Object],and outputs,[object Object],= Flow of dollars,[object Object]

Characteristics of the American Economy,[object Object]

Capitalism:,[object Object],[object Object]

Government should let people (producers & consumers) make economic decisions, including owning resources, without gov’t restraintsDoes the U.S. practice capitalism? If so, how?,[object Object],#1: Limited Role of Government,[object Object],Yes, private individuals own factors of production BUT have to use them within legislated limits.,[object Object]

Individuals free to own and control the factors of production & make economic decisions

There are some government regulations-

Zoning laws, child labor laws, waste disposal, minimum wage, random inspections, etc.#2: Freedom of Enterprise,[object Object]

Pe intro to econ

Pe intro to econ

Recommandé

Contenu connexe

Tendances

Tendances(18)

En vedette

En vedette(9)

Similaire à Pe intro to econ

Similaire à Pe intro to econ(20)

Plus de Nick Allgyer

Plus de Nick Allgyer(18)

Pe intro to econ

Notes de l'éditeur