What is Economics? 1

The study of how people seek to satisfy their needs and wants by making choices Three groups: Individuals Businesses Governments   2

Economic problem of having seemingly unlimited human wants in a world of limited resources. 3

When the demand for a product or service exceeds its supply in a market. Occurs when producers will not or cannot offer goods or services at the current prices. 4

Resources that are used to make all goods and services Land →all natural resources used to produce goods and services. Labor →effort made by a person for which they get paid for. Capital →physical capital: buildings and tools →human capital: knowledge and skills 5

Men and women who decide how to combine land, labor and capital to create new goods and services 7

The most desirable alternative given up as the result of a decision 8

Alternatives that either individuals, businesses or society give up when they take one course of action over another 9

Thinking about the costs and benefits of making changes in behavior. Thinking at the margin Thinking about the costs and benefits of making changes in behavior. When you make a decision, most people think on the margin, meaning they think about the positive and negative benefits of making one decision rather than another. 11

Case Study Notorious BIG aka Christopher Wallace. Wallace was raised in the Brooklyn borough of New York City. When he released his debut album Ready to Die in 1994, he became a central figure in the East Coast hip hop scene and increased New York's visibility in the genre at a time when West Coast hip hop was dominant in the mainstream. While recording his second album, Wallace was heavily involved in the growing East Coast–West Coast hip hop feud fueled by West coast rapper Tupac Shakur. Wallace traveled to Los Angeles (even though there had been threats against his life) in February 1997, to promote his upcoming second studio album and film a music video for its lead single, "Hypnotize". The album, Life After Death, was scheduled for release on March 25, 1997.On March 9, 1997, Wallace was killed by an unknown assailant in a drive-by shooting in Los Angeles.

Mo money...mo problems The Notorious BIG claims that the more money you have the more problems it brings ...envy ..betrayal.. negative energy If that is the case what would you recommend that he do? How could Biggie have changed the events that led up to his murder by thinking at the margin?

Production Possibilities Curve: A graph that shows alternative ways to use an economy’s resources  Factors of production (land, labor and capital) are used to determine how much of a good or service can be produced Efficiency, Growth and Costs are factors that can be seen from production possibility graphs 14

Using resources in such a way as to maximize the production of goods and services When this condition is present it is called the production possibilities frontier Under Utilization: Using fewer resources than the economy is capable of supplying 15

Production Possibility Curve

When an economy grows the curve shifts to the right Condition that reflects a change in factors of production or when resources increase When an economy grows the curve shifts to the right 17

Production capacity can also decrease causing the curve to shift left

**This is why production possibility frontiers usually curve** It is not necessarily money but the opportunity we give up when we choose one option over the other Law of increasing costs: As production switches from one item to another more resources are needed to increase production of the second item. **This is why production possibility frontiers usually curve** 19

Two areas that often change Economists collect data to create production possibility curves based on which goods and services a country can produce based on current resources Resources include land and natural resources, work force, human and physical capital Technology is considered both human and physical capital 20

What to produce?