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Chapter 1 What is Economics?

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Chapter 1 What is Economics? Section 1 Scarcity and the Science of Economics * I. Explain the nature of scarcity and show its relationship to economics. – PowerPoint PPT presentation

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Title: Chapter 1 What is Economics?


1
Chapter 1What is Economics?
  • Section 1
  • Scarcity and the Science of Economics

2
I. Explain the nature of scarcity and show its
relationship to economics.
  • A. TINSTAAFL There is no such thing as
    a free lunch.
  • B. Scarcity The condition that arises
    because society does not have enough
    resources to produce all the things
    people would like to have.
  • C. Unlimited Wants Limited Resources

3
II. Describe the factors of production.
  • A. Land gifts of nature not created by
    human effort.

4
II. Describe the factors of production.
  • B. Capital tools, equipment, and
    factories used in production.

5
II. Describe the factors of production.
  • B. Capital
  • 1) Financial Capital money

6
II. Describe the factors of production.
  • C. Labor peoples efforts, abilities, and
    skills.

7
II. Describe the factors of production.
  • D. Entrepreneurs risk taker in search of
  • profit.

8
III. Examine the three basic economic questions
each society must decide.
  • A. What to Produce?
  • B. How to Produce?
  • C. For Whom to Produce?

9
IV. Define economics and identify the four key
elements within its scope.
  • A. Description What is produced and
    who gets how much.
  • B. Analysis Why are prices what they are?

10
IV. Define economics and identify the four key
elements within its scope.
  • C. Explanation It is useful and
    necessary to communicate to others
    economic activities.
  • D. Prediction Anticipating consequences
    of different courses of action.

11
END OF SECTION 1
12
Chapter 1What is Economics?
  • Section 2
  • Trade-Offs and
  • Opportunity Costs

13
I. Understand that trade-offs are present
whenever choices are made.
  • A. Trade-off
  • An alternative choice.
  • B. Decision-making grid -
  • A tool that can be used to help make an economic
    decision by identifying alternatives and criteria
    to evaluate.

14
II. Discover Opportunity Costs
  • A. Opportunity Cost
  • The cost of the next best alternative when a
    choice is made.
  • Refers to the value of a trade-off.
  • Incurred when trade-offs are made.

15
III. Evaluate the opportunity cost of production
possibilities frontiers.
  • A. Production Possibilities Frontier (PPF)
  • Diagram representing various combinations of
    goods and services when all resources are fully
    employed.
  • Guns and Butter

16
III. Evaluate the opportunity cost of production
possibilities frontiers.
  • C. Characteristics of the PPF
  • 1) Illustrates the concept of opportunity costs.
  • 2) Based on full employment of all productive
    resources.
  • 3) It is used by economists as a tool for
    description and analysis.

17
III. Evaluate the opportunity cost of production
possibilities frontiers.
  • D. When a country produces on its PPF,
  • The decision to produce more of Product/Good A
    means,
  • Less of Product/Good B must be produced.

18
END OF SECTION 2
19
Chapter 1What is Economics?
  • Section 3
  • Basic Economic Concepts

20
I. Understand the difference between needs and
wants, and goods and services.
  • A. Need
  • Basic requirement for survival.
  • Physical or emotional.
  • Oxygen, water, and food.
  • B. Want
  • Means of expressing a need.
  • Specific example of a need.
  • Can live without.

21
I. Understand the difference between needs and
wants, and goods and services.
  • C. Goods
  • Tangible commodity
  • 1) Consumer good
  • 2) Capital good
  • 3) Durable good 3 years
  • 4) Non-durable good lt 3 years
  • D. Service
  • Work that is intangible

22
Explain the relationship among value, utility,
and wealth.
  • A. Value
  • Worth expressed in dollars and cents.
  • To have value, there has to be utility.
  • B. Utility
  • Capacity to be useful to someone.
  • C. Wealth
  • The sum of economic products that are tangible,
    scarce, useful, and transferable.

23
III. Describe the importance of productivity.
  • A. Productivity
  • The efficient use of productive resources.
  • B. Specialization
  • Do whatever task you are able to do best.

24
III. Describe the importance of productivity.
  • C. Division of Labor
  • Workers perform fewer tasks more frequently.
  • D. Human Capital
  • The sum of skills, abilities, health, and
    motivation of people.

25
IV. Understand the importance of economics to
the American free enterprise system.
  • A. Economic interdependence
  • Actions in one part of the country or the world
    have an economic impact on what happens
    elsewhere.

26
IV. Understand the importance of economics to
the American free enterprise system.
  • B. Market
  • Location or other mechanism that allows buyers
    and sellers to deal or exchange economic
    products.

27
IV. Understand the importance of economics to
the American free enterprise system.
  • C. Standard of living
  • Quality of life.
  • D. Free Enterprise Economy
  • Consumers and privately owned businesses make the
    majority economic decisions.

28
END OF CHAPTER 1
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