Presentation on theme: " Citizens must make them every day. Choices occur because resources are limited Needs are required, such as food and shelter Wants make life more."— Presentation transcript:
Citizens must make them every day. Choices occur because resources are limited Needs are required, such as food and shelter Wants make life more comfortable and enjoyable, like vacations
Economics is the study of decisions made in a world of limited resources How things are made, bought, sold and used
Economic models include: Microeconomics: focuses on the small picture (individuals and businesses) Macroeconomics: focuses on the big picture (governments, whole industries, societies) US functions on free enterprise capitalism-produce things their people want and need
Scarcity means there is not enough Scarcity of resources forces people to make economic decisions No country has enough resources to produce what is necessary
Countries have to make choices: What to produce? How to produce? For whom to produce?
People must understand the costs and benefits of economic choices to make the best choice A trade-off requires someone to decide to do one thing rather than another Made by individuals, businesses, societies
Opportunity cost is the second best use after choosing one thing over another Includes money, time, inconveniences, and so on
There are ways to measure different types of costs and benefits.
Types of Costs: Fixed: does not change; has to be paid no matter what Variable: changes based on what is produced Total: fixed costs + variable costs Marginal: cost of producing one additional unit of output
Types of Revenues (money coming in) Total revenue = number of units sold multiplied by average price per unit Marginal revenue: made by selling one extra unit of a product
Marginal benefit is an additional benefit associated with an action Cost-benefit analysis requires rational economic decision making