DO Now: Make a list of your wants and needs. AIM: What is economics? DO Now: Make a list of your wants and needs.

Economics Basic elements of thinking like an economist: the process of deciding what to buy and how much to pay for it. Scarcity – The Basic Economic Problem fundamental economic problem facing all societies, resulting from a combination of scarce resources and people’s virtually unlimited needs and wants Economics = social science dealing with how people satisfy seemingly unlimited and competing wants and needs through the careful use of scarce resources

ECONOMICS NEED = a basic requirement for survival WANT = simply something we would like to have but is not necessary for survival *needs & wants  expressed in terms of economic products

Goods = -tangible economic product that is useful, transferable to others, and used to satisfy wants and needs 1. durable good (3 years) 2. nondurable good (wears out) 3. consumer good (intended for consumer) 4. capital good (a factor of production)

Services = -work or labor performed for someone (intangible)

Paradox of value Some necessities had a very low monetary value while some non- necessities had a very high value Adam Smith – Utility = the capacity to be useful and provide satisfaction

Wealth The accumulation of products that are tangible, are scarce, have utility and are transferable from one person to another Questions all societies face: -What to produce? -How to produce? -For whom to produce?

Gross Domestic Product GDP = the monetary value of ALL final goods, services, and structures produced during a one-year period

Economy Producers -include all kinds of businesses, individual sellers  corporations *Factors of production Land Capital Labor entrepreneurs Consumers “There is no such thing as free lunch.” consumerism: a social movement that was aimed at promoting the interests of consumers

Economic interdependence -Opportunity Cost = cost of the next best alternative (not always measured in terms of dollars/cents -Economic Growth = occurs when a nation’s total output of goods and services increase over time (requires risks and sacrifices) -Productivity = measure of the amount of output produced in a specific time period with a given amount of resources Human capital Division of labor Specialization Economic interdependence IMPROVE

market Meeting place or mechanism through which buyers and sellers of an economic product come together. May be local, regional, national, or global.

Thinking like an economist Economic Model = simplified version of a complex concept or behavior expressed in the form of a graph, figure, equation or diagram COST-BENEFIT ANALYSIS = comparison of the cost of an action to its benefits