Economic choices as an individual and a nation

 Read the section titled “Economic choices” on page 406 in your textbook and answer the above question in 3-4 sentences.

 Economics is what keeps a nation on its feet.  It determines whether or not a nation’s people are educated, well-paid, fed, healthy, and living a good life.  It is all about CHOICES!!  Economics is sometimes called “the science of decision making”

 SCARCITY: the condition in which our wants are greater than the resources available to satisfy those wants.  Even a rich country like the United States does not have enough productive resources to produce all of our goods such as cars, houses, and clothing.  Because of scarcity, we must make choices about which wants to satisfy.

 We have needs that are required for survival:  Examples:  We have wants, or things we would like to have:  Examples:  In an individuals everyday life, they have to make decisions according to their personal budget or income.

Lamborghini Gallardo $175,000 for the hardtop $195,000 for the roadster ** NOT WITHIN MY BUDGET **

 Knowing that Economics is the study of how we make decisions in a world where resources are limited, what are some decisions we could make in our community to better the “economy”.  Read “Americans in Action” on pg 406.

 Musical Chairs:  In the game of musical chairs, there is one less chair for the amount of people who want a chair. One person must be eliminated to accommodate the other peoples needs.  In a society, a lot of times there is less resources to provide for every want that there is. Choices then have to be made!!  There are three main choices that a society must make…

There are surely long list of wants and needs in a community so a decision must be made on what is the most important at the time.  Example: to repair roads or schools or sporting complex or provide services for the retired…

Another choice is HOW ◦ A company or society must choose HOW is will satisfy a want or need.  Example: If we need more oil to satisfy our energy needs, should we allow drilling in an Alaskan wildlife sanctuary or should we restrict oil recovery to more traditional areas?

Once goods and services (or wants and needs) are produced, a society must determine who will receive them. ◦ Who receives the new cars? Who benefits from a new school? ◦ In the United States, most of the time, the wants and needs that are produced are distributed through a price system

 Economists: people who study the economy  Economy: all activity in a nation that together affects the production, distribution and use of goods or services.  When studying different parts of the economy – such as rising unemployment- economists come up with theories and collect data.  The data they collect about a nation is called economic models.

 Economic models are simplified representations of the real world that are used to explain how the economy works or to predict what would happen if something in the economy were to change.  If _________ then __________. (usually shown in a graph or chart)  Remember: Economic models are based on assumption.