What is economics
This presentation is the property of its rightful owner.
Sponsored Links
1 / 57

What is Economics? PowerPoint PPT Presentation


  • 53 Views
  • Uploaded on
  • Presentation posted in: General

What is Economics?. Chapter 1. Economics:. The study of how people seek to satisfy their needs and wants by making choices about how to use scarce resources. Needs: things NECESSARY for survival Wants: things we desire but are NOT ESSENTIAL to survival. Needs vs. Wants. Scarcity.

Download Presentation

What is Economics?

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


What is economics

What is Economics?

Chapter 1


Economics

Economics:

  • The study of how people seek to satisfy their needs and wants by making choices about how to use scarce resources


Needs vs wants

Needs: things NECESSARY for survival

Wants: things we desire but are NOT ESSENTIAL to survival

Needs vs. Wants


Scarcity

Scarcity

  • Limited quantities of resources to meet unlimited wants


Shortage

Shortage

  • A situation in which a good or service is unavailable temporarily


Factors of production

Factors of Production

  • Land

  • Labor

  • Capital

    • Human

    • Physical

Remember these!

You will hear them a lot this semester!


What is economics

Land

Natural resources (land, coal, water, forests, etc.)


Labor

Labor

The effort people devote to a task for which they are paid


Capital

Capital

  • Physical: Human made objects used to create other

    goods and services

  • Human: The skills and knowledge gained by a worker through education and experience


Entrepreneurs

Entrepreneurs

  • Ambitious leaders who combine land, labor, and capital to create and market new goods and services.


What is economics

Factors of Production Model

LAND - cotton

LABOR -seamstress

ENTREPRENEUR –designer, business owner

GOOD – t-shirt

CAPITAL – thread, sewing machine.


What is economics

Factors of Production Model


Opportunity cost

Opportunity Cost

There is no such thing

as a free lunch!


Spring break which would you choose

Spring Break…Which would you choose?

HawaiiNew York

Las VegasCancun

ParisTokyo

VailTahiti


Trade offs options when you make a choice

Individuals

work or free time

study or sleep

Business

Goods or Services

Produce or Sell

Trade-offs…options when you make a choice.


What is economics

Decision Making Grid


Thinking at the margin

Thinking at the Margin


Production possibilities curves

Production Possibilities Curves

  • Graphs that show alternative ways to use an economy’s resources


What is economics

Al's Coffee Shop!

Coffee

A

50

B

40

30

C

20

10

D

0

25

50

70

75

Tea


Efficiency

Efficiency

  • Efficiency means using resources in such a way as to maximize the production of goods and services.

  • An economy producing output levels on the production possibilities frontier is operating efficiently.


What is economics

Coffee

Productions possibilities frontier

50

Any production

along

this line is

EFFICIENT

75

Tea


Efficiency1

Efficiency

  • Efficiency also means that in order to produce more of one good you must give up producing some of the other good.

  • This is because the line represents the limits that scarce resources place on our production possibilities.


What is economics

Coffee

Tea

Efficiency

Coffee

50

40

20

0

0

50

70

75

A

50

B

40

30

C

20

10

D

0

25

50

70

75

Tea


Underutilization

Underutilization

  • Any point inside the line indicates an underutilization of resources.

  • This economy is not using all of the resources that are available.

  • This economy is not producing all the goods and services it could be producing.


What is economics

Al's Coffee Shop!

Coffee

50

Any production

in this

space is

inefficient…you

have the supplies

but aren’t making

the coffee or tea

75

Tea


Growth

Growth

  • Growth If more resources become available, or if technology improves, an economy can increase its level of output and grow. When this happens, the entire production possibilities curve “shifts to the right.”


What is economics

Al's Coffee Shop!

Coffee

50

Al buys more

equipment

and now he can

make even more

coffee or tea!

75

Tea


Law of increasing costs

Law of Increasing Costs

  • As we shift resources from making one good to another, the cost of producing the second item increases.

  • In other words, we have to give up more and more of the first item for each additional unit of the second item.

  • This is because some resources are better suited for one purpose over another.


What is economics

Law of Increasing Costs

Coffee

Tea

Coffee

50

40

20

0

0

50

70

75

A

50

B

40

30

C

20

10

D

0

25

50

70

75

Tea


Chapter 1 things to think about

Chapter 1Things to think about…


What is the difference between a good and a service

What is the difference between a good and a service?


Why is the idea of scarcity a starting point for thinking economically

Why is the idea of scarcity a starting point for thinking economically?


How is scarcity different from shortages

How is scarcity different from shortages?


What special advantages does physical capital offer

What special advantages does physical capital offer?


What role do entrepreneurs play in the economy

What role do entrepreneurs play in the economy?


Name three examples that illustrate how all decisions involve trade offs

Name three examples that illustrate how all decisions involve trade-offs.


Why must the opportunity cost of a decision always be something desirable

Why must the opportunity cost of a decision always be something desirable?


What does the term guns or butter mean

What does the term “guns or butter” mean?


What does it mean to think at the margin

What does it mean to “think at the margin”?


What are the opportunity costs involved in

What are the opportunity costs involved in:


Eating pizza

Eating pizza


Going to see a movie on a tuesday

Going to see a movie on a Tuesday


Going to see a movie on a saturday

Going to see a movie on a Saturday


Watching tv

Watching TV


Studying for a test

Studying for a test


Finishing high school

Finishing High School


Getting married

Getting Married


Having a kid

Having a Kid


Create a decision making grid to defend a decision you will make today

Create a decision making grid to defend a decision you will make today


What is economics

Decide whether to work 2, 4, or 6 hours at an after-school job by comparing the opportunity cost and benefit of each alternative.CostBenefit2 hours4 hours6 hours


What is economics

Decide whether to finish the semester and graduate by comparing the opportunity cost and benefit for each alternativeCostBenefitGraduate NowGraduate laterGet a GEDDrop Out


How is underutilization depicted on a production possibilities frontier

How is underutilization depicted on a production possibilities frontier?


How does a production possibilities curve illustrate how efficient an economy is

How does a production possibilities curve illustrate how efficient an economy is?


How does a production possibilities curve illustrate opportunity cost

How does a production possibilities curve illustrate opportunity cost?


What is economics

Describe a specific event that would make each of the following happen to a production possibilities curve:


What is economics

Still capable of

same output but

not producing

total possible

  • A point moves down and to the left

  • The frontier shifts to the right

Capable of producing

more of every

combination of

products


What is economics

Describe three services that the government provides to its citizens then identify some of the opportunity costs of providing those services.


  • Login