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Chapter 1 Notes

Chapter 1 Notes. Make a list of 10 things you want!!! What is the difference between a “Need” vs. a “want”?. Scarcity. The Economic Problem. SCARCITY. Limited Resources. SCARCITY. Unlimited Wants. Economics Is….

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Chapter 1 Notes

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  1. Chapter 1 Notes • Make a list of 10 things you want!!! • What is the difference between a “Need” vs. a “want”?

  2. Scarcity The Economic Problem

  3. SCARCITY Limited Resources

  4. SCARCITY Unlimited Wants

  5. Economics Is… • The study of limited resources but unlimited wants, which forces people to make a CHOICE!

  6. Opportunity Cost • How much does it cost you to “attend” this particular “class session”? Think about it!Before going on, try to come up withan answer to this question. Talk with a partner.

  7. Opportunity Cost • To answer the question, you should have asked yourself what else you could be doing during this time? • Next, prioritize all of these other activities.

  8. Opportunity Cost • The first item on your list of alternative activities is the opportunity cost of attending this class. • Every activity has a cost - what you gave up.

  9. Opportunity Cost • Because resources are scarce, choices need to be made. • Choice results in cost. • The largest cost of any choice is what you had to give up. • This is called Opportunity Cost.

  10. Economics:TWO BRANCHES Microeconomics Macroeconomics “Small Picture” “Big Picture” Study of individual Study of the economy units. as a whole. Looking at one thing Concerned with the at a time TOTAL picture Individual decision making Societal decision making

  11. Four Factors of Production • Land-natural resources – oil, water, wood, iron, gold. etc • Labor-human resources - an individual providing his/her services for wages • Capital-capitial resources - equipment that can be used for production • Entrepreneurship-someone that uses the first three resources to make a profit. Considered to be a “risk taker” and business leader.

  12. Copy the Table in your Spiral Notebook!!!

  13. Computer Forests Cab driver Bakery Store Owner Petroleum Automobile Brain surgeon Factories Tractor Highway system Radio Mountains Small restaurant owner Minerals Pencil Computer software developer Waitress Ocean Fish Determine which of the four factors of production it falls under:

  14. Come Up With 3 Examples of Your Own and include it in your table • Land: • Labor: • Capital: • Entrepreneur:

  15. Due to scarcity, every Society Must Answer 3 Questions: • What goods shall we produce? • How shall these goods be produced? • For whom should the goods be produced?

  16. In the U.S. the three Qs are answered as follows: • WHAT TO PRODUCE? U.S. production leans towards consumer goods & service • HOW TO PRODUCE? U.S. believes in private enterprise (corporations and small businesses privately owned) • FOR WHOM TO PRODUCE? U.S. production leans towards the large middle class

  17. Marginal Analysis When making important choices we weigh the costs vs. the benefits. What if the costs (time, money, stress) weighs more than the benefit?

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