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JA Economics Chapter One What is Economics?. Economics  Social science that studies how people decide to use scarce resources to satisfy their wants.

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Presentation on theme: "JA Economics Chapter One What is Economics?. Economics  Social science that studies how people decide to use scarce resources to satisfy their wants."— Presentation transcript:

1 JA Economics Chapter One What is Economics?

2 Economics  Social science that studies how people decide to use scarce resources to satisfy their wants  Together and as groups Page 2

3 Want vs. Needs  Review the difference  What is the want-satisfaction chain?  See page 3 in textbook Page 3

4 Want-Satisfaction Chain  Production  Combines economic sources  Results in a good or service Page 4

5 Want-Satisfaction Chain  Distribution  Process of getting a product or service to consumers Page 4

6 Want-Satisfaction Chain  Consumption  Using a product or service  Thought to complete the chain  Consumer choses another product or service to want Page 4

7 Want-Satisfaction Chain Resources Needed Method of Production Method of Distribution Source of availability for Consumption Want- satisfaction Want Page 4

8 Factors of Production  Natural resources  Land – soil, minerals, timber, and fresh water  Human resources  Physically  Mentally  Capital  Buildings  Tools  Machines used for production Page 5

9 Scarcity  Occurs when wants > available resources  Demands that people make choices  Choices give way to opportunity cost Page 5

10 Opportunity Cost  The highest valued alternative given up as a result of making a choice  Resources can only be used one time  Alternatives that are given up  Go to page 5 of the study guide Page 6

11 Economic way of thinking  Scarcity forces people to chose  All choices involve alternatives  You give up one thing for another  There are benefits and costs to making the right choice.  People try to maximize their benefits while minimizing their costs Page 7

12 Economic way of thinking  People try to make good choices  People respond to incentives(positive)  Disincentive is like a fine or punishment.  People gain when they trade voluntarily  Nobody has to trade in US  All people trade to gain Page 7

13 Economic way of thinking  Choices are future orientated  Cannot change past choices  Our Choices are influenced by the Choices of Others  Book talks about oil and interest rates  All economic study involves choices  All choices though do not need money  Example would be volunteer work Page 8

14 Thinking at the Margin  Resources are scarce  Must make careful choices  Economists analyze marginal benefits and marginal costs  Marginal simply means additional  (Bottom of page 9) Page 9

15 Choice-Making by Businesses  Face same scarcity problems  Must pay for scarce items  Looks for the lowest opportunity cost Page 11

16 The Profit Motive  Goal of most businesses  Profit = total sales > total costs  Losses limit the life of the company  Business people think at the margin  Page 8 & 9 of study guide Page 11

17 Basic Economic Decisions in a Market Economy  Free enterprise or capitalism  Relies on voluntary trade  Markets allow consumers and sellers to make exchanges  Both weigh the costs and benefits to make a choice  What, how and for whom? Page 11

18 Micro or Macro  Macro = whole  “big picture”  Nationally  As a group  Micro = individual consumers and businesses  What will you pay?  How much should an employees salary be?  Should we buy new computers? Page 13

19 HOMEWORK  1-4  10-11


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