An Introduction to Economics
Unit 1: Foundations of EconomicsWhat comes to your mind when you hear the word SCARCE?
(video about scarcity)
What is Economics?
A science that deals with the allocation, or use, of scarce resources for the purpose of fulfilling societys needs and wants. Addison-Wesley
OBJECTIVES 1.1EXPLAIN why scarcity and choice are basic problems of economicsIDENTIFY land, labor, and capital as the three factors of production, and identify the two types of capitalEXPLAIN the role of entrepreneursEXPLAIN why economists say all resources are scarce
What is Economics?So then the big two concepts are that:Resources are scarce!Society has unlimited needs and wants!Economics decides the best way of providing one to the other
ScarcityDefinitionA situation in which the amount of something actually available would not be sufficient to satisfy the desire for it, if it were provided free of charge.
MORE VOCABULARYShortageFactors of ProductionLandLaborCapitalPhysical CapitalHuman Capital
Factors of ProductionThere are 4 factors that must all be used to produce anythingNatural Resources (also referred to as land)
Factors of ProductionThere are 4 factors that must all be used to produce anythingLabor effort of a person for which they are paid
Factors of ProductionThere are 4 factors that must all be used to produce anythingCapital human-made resources used to create other goods
Factors of Production3 Kinds of CapitalPhysical Capital Also called Capital Goods, objects that are used to produce other goods
Factors of Production3 Kinds of CapitalHuman Capital knowledge or skills workers get from education and experience
Factors of ProductionThere are 4 factors that must all be used to produce anythingEntrepreneurship person who takes a risk in combining the other 3 factors to create a new good
FACTORS of PRODUCTIONExample of FRENCH FRIES page 6IN N OUT
Making Economic DecisionsEvery decision we make involves trade-offs alternatives that we must give up when we make a choiceExample I could stay up for 3 hours playing Halo, study, or sleep.
PROFILE Gary Becker!Read p. 7 about Gary Beckers thoughts about the marriage market hmmm Then discuss with neighbor:1. Do you agree or disagree that economics guides even lifes most personal decisions???
1.1 QUIZ get a partner!Number your paper 1 - 61. Which of the following are factors of production?a. Capital and Landb. Scarcity and shortagesc. Technology and productivityd. economics and business decisions
Answer is a. capital and land
Next question 2. Which of the following is an example of using physical capital to save time and money?a. hiring more workers to do a job?b. building extra space in a factory to simplify productionc. switching from oil to coal to make production cheaperd. lowering workers wages to increase profits
Answer is b. building extra space in a factory to simplify production
next question 3. To what part of an industry does a workers education contribute?a. technologyb. physical capitalc. human capitald. scarce resources
Answer is c. human capital
next question 4. Which of the following is an entrepreneur?a. a person who earns a lot of money as a singer or dancerb. a person who creates a game and sells it to a game manufacturerc. a person who starts an all-organic cleaning supplies business that employs othersd. a person who works as a highly paid computer programmer
Answer is c. a person who starts an all-organic cleaning supplies business that employs others
Next 5. What is the difference between a shortage and scarcity?a. A shortage can be temporary or long-term, but scarcity always exists.b. A shortage results from rising prices; scarcity results from falling prices. c. A shortage is a lack of all goods and services; scarcity concerns a single item.d. There is no real difference between a shortage and scarcity
answer a. A shortage can be temporary or long-term, but scarcity always exists!
next.6. What does an economist mean by the term LAND?a. farmland onlyb. food crops grown on farmland as well as the farmland itselfc. goods and services that are produced form the landd. all natural resources used to produce goods and services
answer d. all natural resources used to produce goods and services!