What is Economics?

Who gets the candy bar? In five minutes, your group must come up with as many ways to allocate (distribute) the candy bar within the class. In other words, how will you decide who gets it?

Allocation Methods Command/By Need: The teacher or some other authority decides how things will be distributed. Game of Skill: Some form of competition Equal shares: Everyone gets the same amount. Lottery/Game of Chance: Pick numbers or names out of a hat to see who is chosen. First-come-first-served: If you are first in line, you will get the product. Prices: Buying or purchasing for money. (Those with enough money get the scarce good or service.)

Scarcity The condition arising because society does not have enough resources to produce everything people would like to have. (Unlimited wants in spite of limited resources) Not because of lack of money but because of lack of resources

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Factors of Production Means by which society produces and distributes its goods and services Land - Natural resources not created by humans Capital - The tools, equipment, machinery, and factories used in the production of goods and services Labor - People with all their efforts, abilities, and skill Entrepreneur - A risk-taker in search of profits who does something new with existing resources What are the factors for the IPhone?

What are the factors for Henry County High School? Land: Labor: Capital: Entrepreneurship:

To allocate (distribute) scarce (limited) resources (factors of production), societies must answer three economic questions. 1. What is going to be produced? 2. How should it be produced? 3. Who should it be produced for? In a market system, all three are answered by consumers and producers (the people).

Answer to the E.Q. The study of human efforts to satisfy their unlimited wants through the use of relatively scarce resources. This is why Economics is a social science…it involves people and their decision making

Chapter 1, Section 2 1. What’s the difference in a durable and non-durable good? 2. What is a capital good? 3. What two things contribute to something’s value? 4. How can productivity be increased? 5. Give an example of human capital. 6. Give an example of economic interdependence. 7. What are factor markets and product markets?