INTRO to Economics

Section 1

  1. Economics- the study of how individuals and societies make choices about ways to use scarce resources to fulfill their needs and wants.
  2. Want vs. Need
  3. we NEED things to survive
  4. food, clothing, and shelter
  5. Anything besides things needed for basic survival is a want
  6. New cars, computers, luxury items
  7. CHOICES
  8. This is used to determine what wants are the most important in a world with limited resources
  9. Your choices include money on clothing or lunch?
  10. Business’ make choices about
  11. What is produced
  12. How it is produced
  13. Who gets what is produced
  14. These decisions affect worker income and the ability to buy.
  15. Societies also face choices on how to utilize their resources in producing Goods and Services (G & S)
  16. Scarcity exists because of Economics
  17. There is scarcity of resources and in the factors of production
  18. There is only a fixed amount of resources available and people must compete for them ALL THE TIME.
  19. Because of this competition there is scarcity
  20. There are shortages but they are temporary and as a result of circumstances.
  21. Black Thursday
  22. Hurricanes and Floods
  23. Factors of production- resources needed to produce G and S. Resources include:
  24. Land- natural resources such as surface land and water. They are gifts of nature such as
  25. Soil
  26. Water or rain
  27. Rivers
  28. Minerals
  29. Labor- human effort directed towards producing G and S. It is the physical and mental abilities of the population to produce
  30. Includes the quantity and
  31. Quality of the workforce
  32. Skill
  33. Education
  34. Health

*Good- tangible object that satisfies people wants

*Service- action that can satisfy people wants

  1. Capital (K)- previously manufactured goods used to make other G and S.
  2. MONEY is NOT a factor of production
  3. Productive Equipment
  4. Chalk-Expos
  5. Tools
  6. Productive factory
  7. Capital can increase productivity- amount of output (G&S) that results from a given level of inputs (land, labor, and K)
  8. It also includes infrastructure- highways, bridges, ports, communication networks, and airfields
  9. Entrepreneurship-ability of risk-taking individuals to develop a new product and start new business in order to make profits
  10. Entrepreneurial ability- a person who takes the risk and management of an enterprise
  11. Without this person you have nothing
  12. They develop the idea
  13. Some economists add TECHNOLOGY
  14. Advance in knowledge leading to new and improved G & S and better ways of producing them

Section 2

  1. Trade-offs
  2. Exchanging one thing for the use of another
  3. You make a trade-off whenever you use one resource in a way instead of another.
  4. Opportunity Cost- the cost of getting or doing one thing instead of another
  5. Production Possibilities Curve
  6. Shows how much G and S can be produced from a set amount of resources in a specific period of time.

Section 3

  1. Economic Models
  2. Economists study specific parts of the economy by forming theories and gathering data and put data in Economic Models
  3. An economic model is a simplified representation of the real world.
  4. Business and gov’t often use solutions tested on economic models to make decisions.
  5. IN these models factors hold steady despite real world changes in order to study the relationship.
  6. Hypothesis- an educated guess or prediction.
  7. But also have to test others to explain why yours is right or worked
  8. Schools of Economic thought
  9. Their personal beliefs and other factors influence how economists think about the facts and fit them into theories.
  10. Values- the beliefs and characteristics that person or group considers important.
  11. Debate-the gov’t should spend more money on EDU even if it means higher taxes
  12. Analyze different values.