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Introduction to Economics

Introduction to Economics. Economics The study of how people seek to satisfy their needs and wants by making choices. Need - Something like air, food, or shelter that is necessary for survival Want – An item that we desire but that is not essential to survival. Scarcity.

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Introduction to Economics

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  1. Introduction to Economics • Economics • The study of how people seek to satisfy their needs and wants by making choices. • Need - Something like air, food, or shelter that is necessary for survival • Want – An item that we desire but that is not essential to survival

  2. Scarcity • Using limited quantities of resources to meet unlimited needs and wants. Goods & Services FOP’s NEEDS & WANTS

  3. An Economic System… • Organizes its resources to distribute goods and services to its citizens • What are the economic resources?

  4. C E L L apital ntrepreneurship and abor Factors of Production

  5. Capital • Investment in goods that can produce other goods in the future • Human Capital • Education and training, whether formal or on-the-job • Physical Capital • Machines, roads, factories, schools, and office buildings

  6. Entrepreneurship • Creative, risk-taking use of the factors of productions in order to… MAKE A PROFIT Dave Thomas G.W. Carver Sam Walton Henry Ford

  7. Land • Naturally-occurring goods • Ex: • Water, air, soil, minerals

  8. Labor • Human effort used in production

  9. Resource Pine tree Teacher Telephone Chain saw Lawn mower Receptionist Natural gas Drayton McClane Crude oil farmer Category Land Labor Capital & Consumer Capital & Consumer Capital & Consumer Labor Land Labor and Entrepreneur Land Labor and Entrepreneur Factors of Productioncategory = land, labor, capital good,entrepreneur, consumer good

  10. Trade off vs. Opportunity cost • Trade off • An alternative we sacrifice when we make a decision • Opportunity Cost • The value that is given up when making that decision

  11. Identify the trade-off and opportunity cost in the following. • A nation can make either pizzas or robots. They pick pizzas. Trade-off? • Robots • Opportunity Cost? • The value of the robots • Going to school versus a full-time job. Trade-off? • Job. Opportunity cost? • The salary you aren’t going to receive

  12. Car companies retool to make more hybrids than SUVs. • Trade-off? The SUVs. Opportunity Cost? • Loss of sales from the SUVs • Going to the movies or going to see grandma. You pick the movies. • Trade-off? • Granny. Opportunity Cost? • The value of the time spent with grandma.

  13. To cheat on a test or to be honest. Pick—cheat. Trade-off? • Honesty,integrity, reputation • Opportunity cost? • The value you attach to those things

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