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What is Economics?

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What is Economics? The fundamental economic problem Scarcity is: the fundamental problem in economics. People and societies have unlimited wants, but the resources we ... – PowerPoint PPT presentation

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Title: What is Economics?


1
What is Economics?
2
The fundamental economic problem
  • Scarcity is
  • the fundamental problem in economics. People
    and societies have unlimited wants, but the
    resources we have to satisfy these wants are
    limited.

3
What is economics?
  • Economics is
  • the study of how individuals and societies deal
    with scarcity. That is, how people satisfy their
    seemingly unlimited and competing wants with
    resources that are limited.

4
Trade-offs
  • Because of scarcity, we cannot have everything we
    want. We must make choices between alternative
    uses of our limited resources, including income
    and time. We call these choices trade-offs.
  • Its not simply about having enough money.

5
Opportunity costs
  • The cost of the next best alternative use of
    your money, time or resources when you make an
    economic decision is your opportunity cost. Its
    the next best thing you had to give up.

6
Needs vs. Wants
  • A need is a basic requirement for survival what
    you must have to stay alive.
  • A want is a way of expressing a need. This is a
    much broader category.
  • You need food, but you want a hamburger.

7
Goods Services
  • The factors of production are used to produce
    goods and services.
  • Goods a tangible commodity such as a CD, book or
    car.
  • Services Work that is performed for a fee, such
    as auto repair or hair styling.

8
Factors of production
  • These are the resources we use to produce the
    goods and services we need and want.
  • The factors of production include land, labor,
    capital, and entrepreneurs.
  • These are the limited resources we discuss in
    economics.

9
Land
  • Natural resources not created by humans. They are
    gifts from nature.
  • Examples air, water, wood, oil, gold.

10
Capital
  • Tools, equipment and factories used in
    production. They are a result of production or
    man made.
  • Examples Factories, schools, pencils, hammers.

11
Labor
  • The effort, ability and skills of people.
    Basically, the work that people do.
  • Examples teachers, stock brokers, janitors,
    librarians.

12
Entrepreneurs
  • Risk takers in search of profits. They have the
    ability to start new businesses or create new
    products.
  • Examples Bill Gates, Mrs. Fields, Ray Crock
    (McDonalds).
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