Bell Ringer Generate a list of ten things that come to mind when you hear the word “Economics”

What is Economics?

Goods and Services Before getting into the definition of economics, you must have some basic understanding of the difference between a good and a service.

Goods and Services A “good” is something that is tangible that satisfies people’s wants and desires A “service” is something that is intangible that satisfies people’s wants and desires

Goods and Services

Wants and Desires Now you know the difference between a good and a service, and know the difference between tangible and intangible, what are the wants and desires of all individuals??

OUR WANTS ARE UNLIMITED! WE WANT EVERYTHING!!! OUR WANTS ARE UNLIMITED!

Wants and Desires We want food, we want water, we want good grades, we want a haircut, we want money, we want more money, we want a home, we want groceries, we want furniture, we want a car, we want a relationship, we want happiness, we want children, we want to breathe one more breath, we want, we want, we want… The list is endless.

Definition of Economics So… what is the definition of economics? “Economics is the study of how individuals and society, experiencing virtually unlimited wants, chooses to allocate its scarce resources to satisfy those wants.” Great. Sooo… what does that mean?

Definition of Economics “Economics is the study of how individuals and society, experiencing virtually unlimited wants, chooses to allocate its scarce resources to satisfy those wants.”

Definition of Economics “Economics is the study of how individuals and society, experiencing virtually unlimited wants, chooses to allocate its scarce resources to satisfy those wants.”

Scarcity What does it mean when something is scarce? There is a limited amount of it. All resources are limited. It’s as if there’s a constant fight between our unlimited wants and our limited resources.

Scarcity When our unlimited wants come up against our limited resources, there is always a cost. This cost can be more than monetary… There are social costs, emotional costs, health costs, etc. Nothing(!) on Earth is “free” “There’s no such thing as a free lunch.”

Definition of Economics Economics = Scarcity Scarcity = Wants > Available Resources Therefore… Economics = Wants > Available Resources

Definition of Economics http://www.youtube.com/watch?v=n WPrMmv1Tis

Types of Resources 1. Land Land is a scarce resource because there’s a limited amount of it. In economics, land means any natural resource within, on, or above the earth. Examples?? Air, water, raw materials

Types of Resources 2. Labor Labor is a scarce resource because there’s only so many people willing and able to do certain jobs.

Types of Resources 3. Capital In economics, capital refers to a physical item used in the production process. Examples?? Capital is a scarce resource because there are a limited number of factories, machines, etc., and only a certain number of people that can afford them. When you think capital, think…

Factories!

Types of Resources 4. Entrepreneurship An entrepreneur is an individual who is willing to take a risk to start a business. Why are entrepreneurs a scarce resource? Because there are a limited number of individuals that want to start their own business.

Review Goods are _________ ; services are __________ Wants are __________; resources are __________ Economics = ________ > __________ The four types of scarce resources are ______, ______, ______, & ______

Review Create a definition of economics in your own words.

Review Pg. 7, Questions #2 & 9