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Chapter%201:%20Life%20is%20Economics

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Chapter 1: Life is Economics What is Economics? Why should we study Economics? Section A: Unlimited Wants and Limited Resources Scarcity Does scarcity affect all of ... – PowerPoint PPT presentation

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Title: Chapter%201:%20Life%20is%20Economics


1
Chapter 1 Life is Economics
2
What is Economics?
  • Why should we study Economics?

3
Section A Unlimited Wants and Limited Resources
  • Scarcity
  • Does scarcity affect all of the following?
  • Consumers
  • Businesses
  • Government

4
Section B Opportunity Costs
  • Trade-Offs and Opportunity Costs
  • Ted and his Girlfriend pg. 11
  • What are Teds trade-offs and costs?
  • His girlfriends?
  • Is there an opportunity cost to not doing
    homework?

5
Section C From Resources to Products.
  • Production
  • Resources
  • Factors of Production
  • Natural Resources
  • Labor
  • Capital
  • Entrepreneurship

6
Section D How Economists Use Models
  • Model
  • Based on assumptions
  • Used to understand past, present and future.
  • Often change
  • Used by government and business

7
Section E Making Rational Choices
  • Rational Choice- Taking greater value over those
    with lesser values.
  • Different opinions make it hard

8
  • Positive Statements
  • Facts that can be proven
  • Normative Statements
  • Opinion
  • Cannot be proven
  • People can disagree

9
Section F Production Possibilities Frontier
  • Different combinations of two products that can
    be produced from a given quantity of the four
    factors of production.

10
Crusoes Possibilities
11
  • Can Crusoe produce outside the PPF?
  • What does it mean if he is producing inside the
    PPF?
  • How could he move the PPF outward?

12
Point A Working at LESS THAN maximum efficiency.
  • Opportunity cost does NOT have to be paid because
    to achieve more grain you do not necessarily have
    to give up more wine. You just need to be more
    efficient.

13
Points ON the curve Maximum Efficiency
  • Because you are maximally efficient along the
    curve, it is NOT possible to move to another
    point along the curve without an opportunity cost
    being paid.

14
Point B Moving beyond the curve.
  • Only possible if the curve is EXPANDED.
  • How do you move out the curve?
  • Improve the Quality and Quantity of your factors
    of production (FOP)
  • Examples Better tools, technology, education,
    population growth, etc.
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