Presentation on theme: "APK: WHO IS MORE IMPORTANT? Who is more important producers or consumers? Answer the question with details to support your answer."— Presentation transcript:
APK: WHO IS MORE IMPORTANT? Who is more important producers or consumers? Answer the question with details to support your answer
Why individuals and groups make economic choices? Goal 7.03
Economic Activity Market -A location that allows buyers and sellers to exchange goods and services The Decision Makers Consumers- People who purchase products Producers- Group of people who create products Government- Group who controls the market Foreign Sector- Other countries we trade with
The Circular Flow of Economics Product Market Foreign Sector House Market Businesses Market Factor Market Government Income is earned Products are bought Profit is made Provides for the market Trade Offers Jobs/Revenue Buys products
Productivity and Economic Growth * When a nation’s total output increases over time the circular flow gets larger Productivity How efficient resources are being used Specialization Concentrating on a specific skill Division of Labor Breaking the total task into smaller jobs Human Capital The sum of all the skills, ability, and motivation of the people When companies invest in their workers their productivity tends to increase We earn more when we do the things we can do well The more productive you are the more you profit Makes use of different skills
Making Economic Decisions Trade-Offs Exchanging one thing for the use of another. Example When you buy a product, you exchange money for the right to own that product rather than something else you could buy for the same price.
Opportunity Cost Definition < What you cannot buy or do when you choose to do or buy one thing rather than another. Next BEST alternative that you had to give up for the choice you made Example - Cleaning the house includes not only the price of cleaning products but also the time you spent cleaning instead of going out
Marginal Benefit We usually do something because we expect to achieve some benefit. Marginal benefit is the additional benefit associated with an action.
Fixed Cost Expenses that are the same Car Payment Variable Cost Expenses that change with the number of products produced. Water Bill Light Bill Rent/Mortgage
Add them both up… Fixed Cost Variable Cost + = TOTAL COST (complete cost of producing a product)