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Economics 101

Economics 101. The Basics. Why Are We Learning About This?. Standard SSEF1: The student will explain why limited productive resources and unlimited wants result in scarcity, opportunity costs and trade offs for individuals, businesses and governments.

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Economics 101

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  1. Economics 101 The Basics

  2. Why Are We Learning About This? • Standard SSEF1: The student will explain why limited productive resources and unlimited wants result in scarcity, opportunity costs and trade offs for individuals, businesses and governments.

  3. Why Are We Learning About This? (continued) Standard SSEF4: The student will compare and contrast different economic systems, and explain how they answer the three basic economic questions of what to produce, how to produce and for whom to produce.

  4. Why Are We Learning About This? (continued) Standard MM1P4: Students will make connections among mathematical ideas and to other disciplines.

  5. Economics Study of how society manages its scarce resources How the choices determine the use of society’s resources Basic condition that exists when limited productive resources exceed unlimited wants

  6. Scarcity Limited nature of society’s resources Inability of society to produce all the goods and services people wish to have

  7. Resources Productive Raw materials from nature used to produce goods Land, oil, trees, minerals, other natural materials Labor People paid to produce goods and services Police, farmer, teacher, inspector, manager, cashier

  8. Resources (continued) Capital Things used to produce goods and services Buildings, materials, delivery trucks, cash register Entrepreneurship Used by entrepreneurs to produce goods & services Main goal is to satisfy society’s wants and needs

  9. Allocation of Scarce Resources Specialization Limiting the scope of productive efforts instead of trying to produce everything needed Exchange Trading surplus quantities of specialized products for other goods and services

  10. Opportunity Cost Next best alternative given up when individuals, businesses and governments confront scarcity by making choices The cost of giving up Item A and choosing Item B

  11. Economic Utility The ability of a good or service to satisfy a wants and needs of consumers Relative worth of goods and services in an exchange

  12. Main Economic Systems • Command • Market • Mixed

  13. Command Economy Central authority makes key economic decisions Government owns and controls resources and businesses No competition exists Prices are controlled by government

  14. Market Economy Decisions are made in the marketplace Resources are privately owned Business owners set their own prices Also called a private enterprise Individuals must make wise choices

  15. Mixed Economy Contains private and public enterprises Government has more control, but not all

  16. 3 Economic Questions What to produce? How to produce? For whom to produce? How well does each economic system answer these questions? What type of economic system does the US have?

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