ECONOMICS Welcome! Bellringer: Write about how you did over the last nine weeks. What worked for you? What needed improvement? Please complete and submit the economics profile.

ECONOMICS Economics is the study of how a society manages its scarce resources Scarcity: limited quantities (amounts) of resources to meet unlimited wants What are some things that are scarce?

Needs vs. wants Need: something like air, food, or shelter that is necessary for survival Want: an item that we desire but that is not essential to survival What items just mentioned are needs, and which are wants?

NEEDS

WANTS

SCARCITY UNLIMITED WANTS LIMITED RESOURCES CHOICES Three basic questions that all economic systems must answer WHAT? FOR WHOM? HOW? Main problem in economics

Goods vs. services Goods: Physical objects; tangible things Examples: Clothes, shoes, cell phone Services: Actions or activities that one person performs for another Examples: Lawn maintenance, accounting, auto repair

Scarcity or shortage? SCARCITYSHORTAGE Limited quantities of resources to meet unlimited wants Needs and wants are always greater than the supply of that resource Examples: Oil, water, pencils, space … Permanent condition

Scarcity or shortage? SCARCITYSHORTAGE Limited quantities of resources to meet unlimited wants A situation in which a good or service is unavailable Needs and wants are always greater than the supply of that resource Occurs when producers cannot offer goods or services at current prices Examples: Oil, water, pencils, space … Examples: Turkeys at Thanksgiving, farm products due to drought … Permanent conditionCan be temporary or long-term

SHORTAGE

SCARCITY

Factors of production: The three groups of resources that are used to make all goods and services Land: natural resources that are used to make goods and services

LAND How much does an acre of land cost?

Factors of production: The three groups of resources that are used to make all goods and services Land: natural resources that are used to make goods and services Labor: the effort that people devote to a task for which they are paid

LABOR

Factors of production: The three groups of resources that are used to make all goods and services Land: natural resources that are used to make goods and services Capital: any human-made resource that is used to create other goods and services Labor: the effort that people devote to a task for which they are paid

CAPITAL

Types of capital Physical all human-made goods that are used to produce other goods and services Examples: Tools, buildings, new equipment for a business

Types of capital Physical all human-made goods that are used to produce other goods and services Examples: Tools, buildings, new equipment for a business Human the skills and knowledge gained by a worker through education and experience Examples: The ability to perform surgery, going to college to get a degree

Types of capital Physical all human-made goods that are used to produce other goods and services Examples: Tools, buildings, new equipment for a business Human the skills and knowledge gained by a worker through education and experience Examples: The ability to perform surgery, going to college to get a degree FinancialMoney Examples: Cash, a loan to expand a business

Factors of production LandCapital Labor But who is directing the efforts to coordinate these factors to produce?

Factors of production LandCapital Labor Entrepreneur: Ambitious leader who combines land, labor, and capital to create and market new goods and services Risk- taker!

What percentage of small businesses fail within five years? Why?

Passing it on How do businesses do in later generations? Source: Family Business Institute, 2012 GenerationPercent surviving Second30 Third12 Fourth3