BASIC ECONOMIC CONCEPTS SEC.2

1. NEEDS = REQUIREMENT FOR SURVIVAL (food, water, clothing, shelter) 2. WANT = WAY OF SATISFYING A NEED (Specific, choices) 3. FREE PRODUCTS = THINGS THAT ARE PLENTIFUL, NOT SCARCE ENOUGH TO BE A CONCERN IN ECONOMICS. 4. ECONOMIC PRODUCTS = GOODS AND SEVICES THAT ARE USEFUL, SCARCE, AND TRANSFERABLE TO OTHERS.

5. GOOD = A TANGIBLE COMMODITY (4 TYPES OF GOODS) CONSUMER GOOD = INTENDED FOR USE BY INDIVIDUALS CAPITAL GOOD = A MANUFACTURED GOOD USE TO PRODUCE A CONSUMER GOOD. DURABLE GOOD = GOOD THAT LAST 3 OR MORE YEARS NON DURABLE GOOD = GOOD THAT LASTS LESS THAN 3 YEARS. 6. SERVICE = WORK THAT IS PERFORMED FOR SOMEONE. (Fee) 7. CONSUMER = PEOPLE THAT USE GOODS AND SERVICES TO SATISFY WANTS AND NEEDS. (Purchases) 8. CONSPICUOUS CONSUMPTION = THE USE OF A GOOD OR SERVICE TO IMPRESS OTHERS.

9. VALUE = SOMETHING THAT HAS WORTH, EXPRESSED IN DOLLARS AND CENTS.   PARADOX IN VALUE WHY DO SOME THINGS ESSENTIAL TO LIFE HAVE LITTLE MONETARY VALUE (WATER), WHILE SOME NON ESSENTIAL THINGS (DIAMONDS) HAVE MUCH HIGHER VALUE? SCARCITY 10. UTILTY = USEFULNESS 11. WEALTH = THE SUM OF THOSE ECONOMIC PRODUCTS THAT ONE AQUIRES.

12. PRODUCTION = PROCESS OF CREATING GOODS AND SERVICES 13. PRODUCTIVITY = EFFICIENT USE OF PRODUCTIVE RESOURCES. (NOT WASTING) usually labor  14. SPECIALIZATION = PRODUCTIVE INPUTS (LABOR) DO WHATEVER TASKS THAT THEY ARE ABLE TO DO BEST. (CARPENTER, MECHANIC, PLUMBER, ELECTRICIAN, FARMER, ETC.) SPECIALIZATION IS ALSO KNOWN AS DIVISION OF LABOR. 15. ECONOMIC INTERDEPENCENCE = ACTIONS IN ONE PART OF THE COUNTRY/WORLD CAN HAVE AN IMPACT ON WHAT HAPPENS ELSEWHERE. EX. (WEATHER, NATURAL DISASTER)

TYPES OF MARKETS 16. MARKET = LOCATION/MECHANISM WHICH ALLOWS BUYERS AND SELLERS TO DEAL READILY IN A CERTAIN ECONOMIC PRODUCT. 17. FACTOR MARKET = LOCATION/MECHANISM WHERE PRODUCTIVE RESOURCES ARE BOUGHT AND SOLD. 18. PRODUCT MARKET = LOCATION/MECHANISM WHERE PRODUCERS OFFER GOODS & SERVICES FOR SALE.

CIRCULAR FLOW OF $ IN THE ECONOMY

ECONOMIC CHOICES SEC.3

1.TRADE-OFFS = ALTERNATIVE CHOICES 2. OPPORTUNITY COSTS = THE COST OF THE NEXT BEST ALTERNATIVE USE OF TIME, MONEY, OR RESOURCES, WHEN ONE CHOICE IS MADE OVER ANOTHER. (OUR SCARCE RESOURCE [INDIVIDUALS] = time, $, energy ) 3. PRODUCTION POSSIBILITIES FRONTIER = MODEL THAT ILLUSTRATES CONCEPT OF OPP. COSTS. (Copy)

Opportunity Cost Scenarios: Copy questions What are the opportunity costs for: (a) Watching TV all night, (b) Spending your 5 $ for lunch at Jack N the Box, and, (c) Staying up all night studying for final exams?   Create a PPF regarding night studying for 2 subjects (you choose). You have 3 hours of study time. Chart how you will study. How can you study more for 1 subject if it needs more attention? (plot points first, before you draw the curve / frontier)