ECONOMICSECONOMICS

CHAPTER 1CHAPTER 1

A. SCARCITY – What is it?A. SCARCITY – What is it?1.1. Scarcity - when there is not enough of a “resource” to Scarcity - when there is not enough of a “resource” to

meet all demandmeet all demand

2.2. Economics – the study of how people, businesses and Economics – the study of how people, businesses and nations make choicesnations make choices

3. 3. Limited supply vs. exceeding demandLimited supply vs. exceeding demandSupplySupply = the amount of a product or good that is = the amount of a product or good that is produced at a certain priceproduced at a certain priceDemandDemand = the amount of a good or service = the amount of a good or service

someone is willing to buysomeone is willing to buy

4.4. Want = a thing (or something) people desireWant = a thing (or something) people desire

5.5. Needs = what people must have in Needs = what people must have in order to surviveorder to survive

6.6. Good = a thing you can see, touch and Good = a thing you can see, touch and buy or sellbuy or sell

7.7. Service = any kind of work a person Service = any kind of work a person does for others for moneydoes for others for money

WANTSWANTS

Quiz: WantsQuiz: Wants

Car.Car.

Blonde woman in Blonde woman in

a bathing suit.a bathing suit.

Long legs.Long legs.

Sunglasses.Sunglasses.

White shoes……..White shoes……..

Quiz Questions….Quiz Questions….

What color was the car?????What color was the car????? What type of car was it?????What type of car was it?????

NeedsNeeds

B. The Factors of B. The Factors of ProductionProduction

1. the things needed to produce goods and 1. the things needed to produce goods and servicesservices

a. Natural resources - things that are a. Natural resources - things that are from from the earth (or sun - solar power)the earth (or sun - solar power)

b. Labor - work or human resourcesb. Labor - work or human resourcesc. Capital - machines and tools used to c. Capital - machines and tools used to produce goods and servicesproduce goods and servicesd. Entrepreneur - a person who comes d. Entrepreneur - a person who comes

up up with the ideas of goods and serviceswith the ideas of goods and servicesand who take on the risk of starting a and who take on the risk of starting a

businessbusiness

C. Opportunity CostsC. Opportunity Costs

1.1. This occurs every time a choice is madeThis occurs every time a choice is made

2.2. It is defined as the “pleasure derived” or It is defined as the “pleasure derived” or “benefit received” by getting one thing over “benefit received” by getting one thing over

losing the opportunity to get something losing the opportunity to get something elseelse

3. This happens due to scarcity – if things were 3. This happens due to scarcity – if things were unlimited, there would be no problem!unlimited, there would be no problem!

Opportunity Cost….Opportunity Cost….

D. SpecializationD. Specialization

1. When you dedicate your time and 1. When you dedicate your time and energy to learning a certain skill or energy to learning a certain skill or traittrait

2. The use of resources to produce only a 2. The use of resources to produce only a single or few kinds of products and single or few kinds of products and

servicesservices

3. Helps cut down on becoming “too big”3. Helps cut down on becoming “too big”

E. ProductivityE. Productivity

1. the amount of goods and services 1. the amount of goods and services produced by a worker or business in a produced by a worker or business in a given time periodgiven time period

2. Capital, education and technology all 2. Capital, education and technology all play a role in productivity play a role in productivity