Chapter 2 Notes: ECONOMIC DECISION MAKING
List 5 things you wish you had RIGHT NOW. It could be ANYTHING.
1.4.
2.5.
3.
What is stopping you from having those 5 things?
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Are people's wants unlimited? If so, why is that?
–______
–______
SCARCITY OF GOODS
Scarcity exists because:
-______
-Even if everyone had all the money in the world, you still would not be able to get everything that you want.
SHORTAGES
______: a short-term loss of a good or service.
-______: wars, natural disasters, fads, media crazes, and prices
-A shortage is a ______situation.
What are some other reallife examples of shortages?
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HOW DO WE SATISFY OUR WANTS?
We satisfy our wants by producing goods and services using the ______
______.
______also called: ______
Land
Labor 4th Factor of production: ______
Capital
THE PRODUCTION EQUATION
The Production Equation
______+ ______+ ______+ ______= ______
OR
INPUTS = OUTPUTS
Economists use the ______to represent the process of combining ______to produce ______.
TYPES OF RESOURCES: LAND
______aka “gifts of nature”
•______
•______
______- the resources that go into making ______
______-the goods and services are produced with ______
3 Types of Land Resources:
______ -won’t run out such as the sun & wind
______-can be replaced such as forests, fresh water, animals/fish
______-cannot be replaced such as fossil fuels, natural gas, coal, etc.,
TYPES OF RESOURCES: LABOR
______The time and effort a person puts towards the production of a good or service.
Two Types of Labor
______-using the actual body in an effort to produce a good or service
______-less use of the actual body, effort more focused with using the brain.
-Examples include writing legal briefs, using/creating computer programs, lesson planning…
(Quality of Labor)
______- the knowledge and skill a person has that they can use in the production of a good or service.
-It is gained from education, on-the-job training, and other experiences.
-Determines pay and productivity.
TYPES OF RESOURCES: CAPITAL
Two Types of Capital Resources:
______The tools, buildings, machinery needed to produce a good or service.
______The money used to buy ______that is used in the production of a good or service.
HOW TO IMPROVE PRODUCTIVITY
______measures how efficient goods and services are produced
•Measuring Productivity= Outputs/Inputs
•Example: 600 boards/ 10 trees = 60 boards per tree
There are 2 ways to increase productivity:
•Decrease the amount of ______, but keep the same amount of ______
•Increase the amount of ______, but use the same amount of ______
Satisfaction…
______- the pleasure, satisfaction, or benefit a person receives from consuming a product or service or from taking an action
______-is the extra satisfaction or pleasure you will get from an increase of one additional unit of a good or service.
Can you think of an example?
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______- the general observation that as the quantity of a good or service consumed increases, the benefits for the consumer of each additional unit decrease
What Do We Give Up When We Make a Choice?
______- refers to the cost of the next best alternative that you give up
(You go to the movies and decide what you want from the concessions. You narrow it down to popcorn or Twizzlers. ______.)
•Pick a typical day after school & think of what activity you do at each time.
•What is the opportunity cost at each time slot (the alternative activity you didn’t choose)?