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1. C H A P T E R. What Is Economics?. ECONOMICS. The social science concerned with the efficient use of scarce resources to achieve the maximum satisfaction of economic wants. ECONOMICS.

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What is economics

1

C H A P T E R

What Is Economics?


Economics
ECONOMICS

The social science concerned with the efficient use of scarce resources to achieve the maximum satisfaction of economic wants.


Economics1
ECONOMICS

The social science concerned with the efficientuse of scarce resources to achieve the maximum satisfaction of economic wants.


WHY STUDY ECONOMICS

  • Most __________ decisions involve economics.

  • An understanding of economics and government are the keys to participatory citizenship.

  • Learn analytical and observational skills that are important in the workplace.

  • Business managers or owners need these skills and understanding.

  • Make better financial decisions with your investments.

  • Foundation for careers in accounting, business, finance, marketing, or public policy.


THE FOUNDATION OF ECONOMICS

SOCIETY HAS VIRTUALLY

UNLIMITED WANTS...


THE FOUNDATION OF ECONOMICS

SOCIETY HAS VIRTUALLY

UNLIMITED WANTS...

BUT LIMITED OR SCARCE

RESOURCES!




GOODS & SERVICES PROVIDE...

UTILITY

WANT vs. NEED


The economic way of thinking
The Economic Way of Thinking

Scarcity

  • The world has limited resources.

  • These resources are desirable.

  • TINSTAAFL

    • There is no such thing as a free lunch


What is the difference between a trade off and opportunity cost

Trade-Off

An exchange of one or more thing(s) in return for another.

Opportunity Cost

The value of the next-highest valued alternative or the forgone cost.

What is the difference between a Trade-Off and Opportunity Cost?


What is the difference between a trade off and opportunity cost1

Trade-Off

An exchange of one or more thing(s) in return for another.

Opportunity Cost

The cost of passing up the next best choice.

What is the difference between a Trade-Off and Opportunity Cost?


Friday night options
FRIDAY NIGHT OPTIONS

  • Go out with friends

  • Stay home and watch TV

  • Go on a date

  • Study economics

  • Attend the basketball game

    The one we pick is our choice, the rest become Trade-offs.

    The “next best” alternative becomes the Opportunity Cost.


Friday night options1
FRIDAY NIGHT OPTIONS

  • Go out with friends

    The one we pick is our choice, the rest become Trade-offs.

    The “next best” alternative becomes the Opportunity Cost.


Go out on a date
GO OUT ON A DATE

  • The Opportunity Cost of going out on a date is what you’ve lost by not going out with friends.

    • Excitement

    • Fun

  • Your decision was based on getting more utility on your date.

  • That’s the “incentive”


Any other costs
ANY OTHER COSTS?

Dating is expensive. Let’s say you spend $30. You could have spent that $30 on something else.


So our opportunity cost is
SO OUR OPPORTUNITY COST IS…?

  • The lost fun you would have had with your friends.

  • The cash you spent on your date.


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