CHAPTER 1: WHAT IS ECONOMICS???

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FUNDAMENTAL ECONOMIC CONCEPTS

• CHAPTER 1 WHAT IS ECONOMICS???

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SCARCITY AND THE SCIENCE OF ECONOMICS

• TINSTAAFL-There is no such thing as a free
  lunch
• THE FUNDAMENTAL ECONOMIC PROBLEM
• SCARCITY
• THE 4 FACTORS OF PRODUCTION
• LAND
• LABOR
• CAPITAL
• ENTREPRENEURS
• THREE BASIC ECONOMIC QUESTIONS
• WHAT SHOULD SOCIETY PRODUCE??
• HOW SHOULD IT BE PRODUCED??
• FOR WHOM IS IT PRODUCED??

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MEANING AND SCOPE OF ECONOMICS

• MACROECONOMICS, MICROECONOMICS
• DEFINITION OF ECONOMICS
• STUDY OF HOW PEOPLE SATISFY COMPETING WANTS AND
  NEEDS THROUGH THE CAREFUL USE OF SCARCE
  RESOURCES.
• THE STUDY OF ECONOMICS IS BASED ON THE SOLVING OF
  ECONOMIC PROBLEMS
• ECONOMISTS
• 1. DESCRIPTION
• 2. ANALYSIS
• 3. EXPLANATION
• 4. PREDICTION
• These 4 steps help create Economic Models.

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ECONOMIC GROWTH PER REGION OF USA 2010
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2012 PROPOSED US BUDGET
INFRA- STRUCTURE 5
MISCELLANOUS ??


MILITARY SPENDING 20
LAW ENFORCEMENT 8
BUSINESS AND BANKING REGULATION 8
SOCIAL PROGRAMS 22
EDUCATION 12
TRANSPORTATION 14
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TRADE-OFFS AND OPPORTUNITY COSTS
TRADE OFFS CHOICES DECISION-MAKING GRID-- 30,000
Price Use Cost of Upkeep
CAR TRUCK
OPPORTUNITY COSTS
PRODUCTION POSSIBILITIES CURVE
MILITARY GOODS
CARS, TRUCKS
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SECTION 3 WANTS AND NEEDS

• WANTS
• NEEDS
• GOODS, SERVICES
• Durable good
• Non Durable
• CONSUMERS
• Conspicuous consumption
• PRODUCERS
• VALUE
• PARADOX OF VALUE
• UTILITY
• WEALTH

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• PRODUCTIVITY
• PRODUCTIONmake a product efficiently.
• Efficiency is based on
• SPECIALIZATION OF LABOR
• DIVISION OF LABOR
• HUMAN CAPITAL investment, time, labor,
• ECONOMIC INTERDEPENDENCE
• THE WORLD IS TIED TOGETHER ECONOMICALLY.
• COUNTRIES DO NOT HAVE THE ABILITY OF EXISTING IN
  ISOLATION ANYMORE
• THE USA DEPENDS ON 60 OF ITS LAND RESOURCES FROM
  OTHER COUNTRIES.

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ECONOMIC SYSTEMS AND CIRCULAR FLOW MODELS

• TRADITIONAL
• EXAMPLES AND DESCRIPTION
• STRENGTHS
• WEAKNESSES
• COMMAND
• EXAMPLES AND DESCRIPTION
• Dialectic materialism---ThesisAntithesis--Synthes
  is
• STRENGTHS
• WEAKNESSES
• CAPITALISM, MARKET, FREE ENTERPRISE
  (laissez-faire)
• EXAMPLES AND DESCRIPTION
• STRENGTHS
• WEAKNESSES
• MIXED-MARKET SYSTEMJohn Maynard Keynes, FDR.
• INVOLVES TAXES, AND GOVERNMENT REGULATION
• ECONOMIC AND SOCIAL GOALS OF AMERICAN ECONOMY
• ECONOMIC FREEDOM
• ECONOMIC EFFICIENCY
• ECONOMIC EQUITY

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AMERICAS ECONOMIC SYSTEMMIXED-MARKET

• 1. COMPETITION AND FREE ENTERPRISE
• ECONOMIC FREEDOM
• VOLUNTARY EXCHANGE
• PRIVATE PROPERTY
• PROFIT MOTIVE
• 2. THE ROLE OF THE ENTREPRENEUR
• 3. THE ROLE OF THE CONSUMER
• 4. THE ROLE OF GOVERNMENT INVOLVEMENT
• PROTECTOR
• PROVIDER AND CONSUMER
• REGULATOR
• PROMOTER OF NATIONAL GOALS
• RESULTING IN A MIXED-MARKET ECONOMIC SYSTEM