1. Economics introduction

2. Why should we study Economics?
?v=gTAMRERJgVY

3. What is economics?
ws/economy/2014/10/21/we- the-economy-cave-o- nomics.cnnmoney/

4. Economics
Economics:
the study of how people try to satisfy seemingly unlimited and competing needs and wants through the careful use of relatively scarce resources
Scarcity:
the condition that results from society not having enough resources to produce all the things people would like to have

5. Need:
A basic requirement for survival
Want:
Something we would like to have but is not necessary for survival

6. Our needs and wants are usually expressed in terms of economic products
Economic products are goods that are:
Useful
Relatively scarce
Transferrable to others
Economic products fall into two groups:
Goods (tangible)
Services (intangible)

7. Goods fall into four categories: GOODS
Useful tangible item that can be used to satisfy a need or want
Goods are then divided into categories, depending on there use.
Some goods can belong to two groups at the same time
Goods fall into four categories:
GOODS

8. Durable good:
Item that lasts three years or longer
Ex: Machinery, car, refrigerator, etc…
Nondurable good:
Item that lasts less than three years when used on a regular basis
Ex: paper, most clothing items, food

9. Consumer good:
Intended for use by individuals
Ex: shoes, shirts, cars, etc…
Capital Good:
Tools, or machinery, or equipment that is used by businesses to produce other products

10. SERVICES Services: Work that is performed for others Ex:
haircuts, home repairs, entertainment, etc.
Work that doctors, lawyers, and teachers perform

11. Value:
Worth that can be expressed in dollars and cents
For something to have value, it must also have utility
Paradox of value:
The situation in which some necessities have low monetary value while some non-necessities have a much higher value
AEs

12. Utility:
The capacity to be useful and provide satisfaction
Wealth:
Accumulation of products that are:
Tangible
Scarce
Have utility
Transferable

13. Everything we do has a cost
– Even when it seems as if we are getting something “for free”
Do you really get a free meal when you use a buy one, get one free” coupon?
The more a company gives away “free”, the more it has to raise the prices for other items it sells

14. Most things in life are not free, because someone has to pay for producing them in the first place
Economist use the term TINSTAAFL to describe this concept
“There is no such thing as a free lunch”

15. Three basic questions every society faces:
WHAT to produce?
Society must choose based on its needs
HOW to produce?
Society must choose based on its resources
FOR WHOM to produce?
Society must choose based on its population and other available markets

16. Economics is also a social science because it deals with the behavior of people as they deal with the issues of needs and wants, versus scarce resources
The four key elements are:
Description
Describes economic activity
Gross Domestic Product (GDP)
Monetary value of all final goods and services, and structures produced, within a country’s borders in a 12-month period.

17. GDP is the most comprehensive measure of a country’s wealth4
Analysis:
Economics analyzes the economic activity it describes
Why prices go up or down
Or how taxes affect savings and how things happen

18. Explanation:
Refers to how economists communicate knowledge of the economy and its activities to others
Prediction:
Refers to how past economic activities can advise us of potential future economic activity

19. Section 1.2

20. What is this the logo for?

21. McDonalds
Why do you know this logo? Why do you think McDonalds is so successful? What does McDonalds need to have to run its restaurants? What would happen to McDonalds if these went away?

22. Famous former employees
Rachel McAdams
Jeff Bezos (Amazon)
Sharon Stone
Jay Leno
Seal
Carl Lewis
Pink
Star jones
Keenan Wayans
Shania Twain
DL Hughley
James Franco
Lin-Manuel Miranda

23. Factors of Production
Factors of production – resources required to produce the things we like to have
Land – natural resources not created by humans
Capital – tools, equipment, machinery, and factories used in production of goods and services

24. Labor
people’s efforts, abilities and skills
Entrepreneurs
Risk takers in search of profits who do something with existing resources
People who start new businesses or bring new products to market

26. Production possibilities curve
Everything we make requires the four factors of production
Economists use it to illustrate all possible combinations of goods and services an economy can produce

27. Production possibilities curve

28. Opportunity cost Opportunity cost
Cost of the next best alternative use of resources when one choice is made rather than another

29. Opportunity cost

30. Trade-offs Trade-offs
Alternative choices that are given up in favor of the choice we select

31. Section 1.3

32. Economic growth
When a nation’s total output of goods and services increases over time
Important for two reasons:
Because of scarcity, everyone wants more than what they currently have
As populations grow, more people will want the goods and services
Economic growth requires risk and sacrifices

33. Productivity
Measure of the amount of goods and services produced with a given amount of resources in a specific period of time
Human capital - Investments in people
Individuals can invest in education
Employers can invest in training and other programs to improve skills
Government can invest by providing financial aid for education and health care costs

34. Division of labor and specialization can improve productivity
Division of work into a number of separate tasks to be performed by different workers
Increases efficiency by ensuring that workers become good at specific tasks

35. Specialization
Assignment of tasks to the workers, factories, regions, or nations that that can perform them most efficiently
Great example: Ford’s assembly line production
Cut the time to assembly a car from 1.5 days to about 2.5 hours
Reduced the price of a new car by 50%

36. Circular Flow of Economic Activity
The key feature of the circle flow is the market
Markets:
Location or other mechanisms that allows buyers and sellers to exchange a specific product
Local, regional, national, global, and cyberspace

37. Factor Markets:
Where all of the factors of production are bought and sold
Where people earn their incomes
Center on the four factors of production
Product Markets:
Where people spend their income
Center on goods and services

38. Individuals and businesses are connected by markets