1. In what ways do people cope with the problem of scarcity?
What is Economics?
In what ways do people cope with the problem of scarcity?

2. Definition
A social science dealing with how people satisfy seemingly unlimited and competing needs and wants with the careful use of scare resources.

3. The Basic Economic Problem
Scarcity – fundamental economic problem of meeting people’s virtually unlimited needs and wants with limited resources.
Why are resources scarce?
Why are wants and needs unlimited?

4. Needs and Wants
Needs & wants are usually expressed in terms of economic products.
Goods – Tangible economic products.
Services – Work that is performed for someone else.
Both have value.
Why do things have value?

5. The Paradox of Value
This idea confused philosophers until Adam Smith came along.
Wrote The Wealth of Nations which explained many economic concepts.
Scarcity & utility cause something to have value.
Utility is not measureable, and varies from person to person.

6. Wealth
A nation’s wealth accounts for everything that can be exchanged.
Goods are counted as wealth, but services are not because they are intangible.

7. TINSTAAFL “There Is No Such Thing As A Free Lunch”
Everything we do has a cost.

8. Questions All Societies Face
WHAT to Produce?
HOW to Produce?
FOR WHOM to Produce?

9. WHAT to Produce? Cannot produce everything people want.
In different countries this question is answered by different groups of people.
How do American consumers determine what will be produced?

10. HOW to Produce? Should a producer use more machinery or more people?
Answer dictated by the situation the producer finds itself in.

11. FOR WHOM to Produce?
There are not enough of a good for everyone, so the producer must decide who will receive the product.

12. Scope - Description Economics describes economic activity. GDP Jobs
Prices
Trade
Taxes
Government Spending

13. Scope - Analysis
Economics analyzes the economic activity it describes.
Why are some prices higher than others?
Why do some people get paid more than others?

14. Scope - Explanation
Economists must communicate the information they gather.
Based on careful research and attribute ideas to source material.

15. Scope - Prediction Economics helps make predictions about the future.
Studies what is happening, what tends to happen, and the possible outcomes of many actions.