Presentation on theme: "Chapter One What is Economics?"— Presentation transcript:
1Chapter One What is Economics? JA EconomicsChapter OneWhat is Economics?
2Page 2EconomicsSocial science that studies how people decide to use scarce resources to satisfy their wantsTogether and as groups
3Want vs. Needs Review the difference Page 3Want vs. NeedsReview the differenceWhat is the want-satisfaction chain?See page 3 in textbook
4Want-Satisfaction Chain Page 4Want-Satisfaction ChainProductionCombines economic sourcesResults in a good or service
5Want-Satisfaction Chain Page 4Want-Satisfaction ChainDistributionProcess of getting a product or service to consumers
6Want-Satisfaction Chain Page 4Want-Satisfaction ChainConsumptionUsing a product or serviceThought to complete the chainConsumer choses another product or service to want
7Want-Satisfaction Chain Page 4Resources NeededMethod of ProductionMethod of DistributionSource of availability for ConsumptionWant-satisfactionWantWant-Satisfaction Chain
8Factors of Production Natural resources Human resources Capital Page 5Factors of ProductionNatural resourcesLand – soil, minerals, timber, and fresh waterHuman resourcesPhysicallyMentallyCapitalBuildingsToolsMachines used for production
9Scarcity Occurs when wants > available resources Page 5ScarcityOccurs when wants > available resourcesDemands that people make choicesChoices give way to opportunity cost
10Page 6Opportunity CostThe highest valued alternative given up as a result of making a choiceResources can only be used one timeAlternatives that are given upGo to page 5 of the study guide
11Economic way of thinking Page 7Economic way of thinkingScarcity forces people to choseAll choices involve alternativesYou give up one thing for anotherThere are benefits and costs to making the right choice.People try to maximize their benefits while minimizing their costs
12Economic way of thinking Page 7Economic way of thinkingPeople try to make good choicesPeople respond to incentives(positive)Disincentive is like a fine or punishment.People gain when they trade voluntarilyNobody has to trade in USAll people trade to gain
13Economic way of thinking Page 8Economic way of thinkingChoices are future orientatedCannot change past choicesOur Choices are influenced by the Choices of OthersBook talks about oil and interest ratesAll economic study involves choicesAll choices though do not need moneyExample would be volunteer work
14Thinking at the Margin Resources are scarce Must make careful choices Page 9Thinking at the MarginResources are scarceMust make careful choicesEconomists analyze marginal benefits and marginal costsMarginal simply means additional(Bottom of page 9)
15Choice-Making by Businesses Page 11Choice-Making by BusinessesFace same scarcity problemsMust pay for scarce itemsLooks for the lowest opportunity cost
16The Profit Motive Goal of most businesses Page 11The Profit MotiveGoal of most businessesProfit = total sales > total costsLosses limit the life of the companyBusiness people think at the marginPage 8 & 9 of study guide
17Basic Economic Decisions in a Market Economy Page 11Basic Economic Decisions in a Market EconomyFree enterprise or capitalismRelies on voluntary tradeMarkets allow consumers and sellers to make exchangesBoth weigh the costs and benefits to make a choiceWhat, how and for whom?
18Micro or Macro Macro = whole Page 13Micro or MacroMacro = whole“big picture”NationallyAs a groupMicro = individual consumers and businessesWhat will you pay?How much should an employees salary be?Should we buy new computers?