Economics….the basics Why does scarcity force economic decisions resulting in trade-off’s & opportunity costs?

Economic Theory Economics is a theoretical discipline (based on unproven, but testable assumptions). Economists make assumptions about the way producers & consumers act & react to various incentives. Economics touches on many other disciplines: Psychology, sociology, history, government, & geography. Most news events (most conflicts) are economic in nature. BP Oil Spill, Ga Schools (Budgets), World Cup, etc.

Course Overview 4 Econ has five domains (Areas of Study) 4 Fundamentals - Resources, Scarcity, rational Decision making, Trade-offs, costs & benefits, economic systems, & markets.

Domain – Microeconomics 4 Understanding the factors that affect individual markets- how producers & consumers interact & react.

Macroeconomics 4 Understanding entire economic systems; measuring economic health; Economic problems & how policy makers address them?

International Economics 4 Analyze: why we trade? The Cost & Benefits of trade? What should we produce & what should we buy? Barriers vs. Free trade? Comparing currencies?

Personal Finance 4 You & the Economy. Building wealth? Saving & Investing? Costs & Benefits of Borrowing (Debt)? Budgeting? Insurance?

Economic Actors 4 Consumers – make economic decisions about needs & wants. 4 * What goods & services to buy? 4 * How to allocate limited resources? 4 Producers – make decisions about what goods & services to provide to consumers. Goods Physical objects that can be purchased (Examples:_________) SERVICES- actions or activities that are performed for a fee (Examples:__________)

Needs vs. Wants 4 Needs - Resources that are necessary for survival. Examples _________________ 4 Wants - items we desire but are not essential for survival. Examples_______

Some KEY Ideas to understand 4 Costs – things you give up when you make a decision (not the price). 4 Benefits – things you gain when you make a decision. 4 (ex. What are the costs & benefits of getting a college education?) 4 Market – the free exchange of goods & services (Not necessarily a place, but the meeting of those who want to buy with those who want to sell).

Personal Finance 4 Rational Financial Decision Making - weighing the costs & benefits of spending & saving decisions. - So, rational decisions are decisions in which the benefits outweigh the costs. Financial Planning - Setting long & short term goals * Short Term – saving for clothes, weekend * Long term – prom, spring break college, retirement, etc.

Incentives 4 Anything that helps an economic actor make a decision 4 Can be positive or negative

Economic Theory Economics is a theoretical discipline (based on unproven, but testable ideas). Economists make assumptions about the way producers & consumers act & react to various incentives. Economics touches on many other disciplines: Psychology, sociology, history, government, & geography. Most news events (most conflicts) are economic in nature.

Microeconomics 4 Studying the economic behavior & decisions of small units: families, high schools students, businesses. 4 Example - Chick-fil-a or McDonalds? 4 Micro decisions - How to allocate weekend spending money?

Macroeconomics 4 Behavior of entire economies (large units) like those of entire countries, state, or region. 4 Study the impact of illegal immigration on the U.S. economy. 4 Macro Decisions - made by government policy makers: Ex- Provide tax rebates to citizens to jump start the economy.