What is Economics?

A want is an item that we desire but are not essential for survival. What is Economics? Scarcity & Choice: The study of economics begins with the idea that people cannot have everything they need and want. A need is something like air, food, shelter (basic items for survival). A want is an item that we desire but are not essential for survival.

What is Economics? Scarcity & Choice: Because people cannot have everything they need or want, they must consider their options and decide which choice will fill their needs the best.

Why must people make choices? What is Economics? Scarcity & Choice: Economics is the study of how people seek to satisfy their needs and wants by making choices. Why must people make choices?

Goods – physical objects such as shoes & shirts. What is Economics? Goods – physical objects such as shoes & shirts.

What is Economics? Services – are actions or activities that one person performs for another.

Scarcity: What is Economics? It exists in all places, at all times. Scarcity – implies limited quantities of resources to meet unlimited wants. Scarcity is not the same thing as a shortage. A shortage occurs when producers will not or cannot offer goods or services at the current price. They are temporary- sometimes can be long-term.

What is Economics? 4 Factors of Production: Resources that are used to make goods and services. 1. Land All natural resources used to produce goods and services. Include fertile land, coal, water, forests, cattle, etc.

What is Economics? 2. Labor The effort that a person devotes to a task for which that person is paid.

Any human-made object used to produce other goods and services. What is Economics? 3. Capital Any human-made object used to produce other goods and services.

What is Economics? Two Types of Capital: Physical – human-made objects used to create other goods and services. i.e. buildings, tools, equipment, and etc. An oven in a bakery; a sewing machine in a clothing factory; bulldozer to clear land for homes Human Capital – the knowledge and skills a worker gains through education and experience. A country needs physical and human capital to produce goods and services.

4. Entrepreneurship/Entrepreneurs What is Economics? Factors of Production: 4. Entrepreneurship/Entrepreneurs The leaders who combine the land, labor, and capital together to make a good or service. They are the risk-takers by starting new businesses, develop new ideas, create new industries, and fuel economic growth. Bill Gates – Microsoft Henry Ford – Ford Motor Company

What is Economics? Scarce Resources: Economists say that all goods and services are scarce because the land, labor, and capital used to create them are scarce. Any good that we can talk about would be considered to be scarce since the land, labor, and capital to produce that good is scarce.

What is Economics? Quiz: What is the difference between a good and a service? Why is the idea of scarcity a starting point for thinking economically? How is scarcity different from shortage? List and describe the four factors of production. What is physical capital? Give and explain one example. What role do entrepreneurs play in the economy?