1. What is Economics
Chapter 1

3. What we will learn: 2.1 Apply the concepts of basic economics.
2.3 Analyze economic problems and goals of society.
2.4 Analyze the economic problem of scarcity. values
2.5 Assess the importance of natural resources and their relationship to economic decision making.

4. What does that mean? define economics
explain why scarcity and choice are the basis of economics
Distinguish between shortages and scarcity
describe what entrepreneurs do
define the three factors of production
explain how scarcity affects the factors of production

5. Terms to know Need Want Services Goods Scarcity Economics shortages
Entrepreneur
Factors of production
Land
Labor
Capital
Physical capital
human capital

6. What is economics?
Social Science concerned with the way society chooses to employ its limited resources which have alternative uses to produces goods and services for present and future consumption.
The study of how society seeks to satisfy their needs and wants by making choices
what is economics video

7. FACT:
People cannot have everything they want and need

8. Need Something essential for survival Food Water Clothing Shelter
Medical care

9. want
Something that people desire but that is not necessary to survival

10. People satisfy their needs and wants with goods and services

11. Goods
Physical objects that someone produces
Food
Clothing
Video games

12. Services Actions or activities that one person performs for another
Medical care
Haircuts
Waitress
concert

13. The problem of limits People’s wants and needs are unlimited
When one want is satisfied, another arises
Goods and services, however, are limited
No one can have an endless supply of anything
Sooner or later, a limit is always reached

14. scarcity
The fact that limited amounts of goods and services are available to meet unlimited wants

15. Scarcity forces people to make choices

16. If you decide to study for a test, you cannot go to the mall or do volunteer work at the same time
A store must choose between hiring ten new workers or paying for more advertising to attract new customers
A city council might debate whether to use its money to fix an aging school building or to hire more fire fighters

17. Economics is the study of how people seek to satisfy their needs and wants by making choices.
Because people act individually, in groups (such as a business), and through governments, economists study all three.

18. Scarcity v shortage Scarcity is not the same as a shortage
A shortage occurs when consumers want more of a good or service than producers are will to make available at a particular price
Shortages can be temporary or long- term

19. Scarcity v shortages Unlike shortages, scarcity always exists
There are not enough goods and services to supply all of society’s needs and wants
That is because the resources that go into making those goods and services are scarce

20. What are those resources?
Factors of production—land, labor, and capital

21. Entrepreneurs and the Factors of production
Entrepreneurs are people who decide how to combine resources to create new goods and services
Entrepreneurs are risk-takers
They are willing to take a risk to make a profit
Profit motive
They develop new ideas, start businesses, create industries, and fuel growth

22. What is an entrepreneur?
Anyone who opens a business, large or small
They decide how to assemble the resources to make all goods and service
Those resources are factors of production
Land
Labor
Capital
*some people believe that Entrepreneurs are the 4th factor of production

23. What entrepreneurs do Recognize a need or want
Assemble the factors of production
Provide goods or service

24. Look at an entrepreneur
Kelly
Kelly recognizes that her town needs something
People want a snack that is both healthy and tasty
Kelly asks…
What if I opened a snack bar that served fruit and yogurt smoothies?

25. Look at an entrepreneur
Kelly begins to pull together the factors of production she needs to turn her idea into a reality
Natural resources
People to do the work
Objects used to create goods and services
Acquired knowledge and skills
Human-made resources

26. Look at an entrepreneur
Kelly took a financial risk by opening her own business
If the risk pays off, Kelly gets a profit, her employees get a wage, and her customers get a healthy snack

28. Factors of production
Land
Labor
capital

29. Land
Labor
Capital

30. Land All natural resources used to produce goods and services
Land for farming
Raw materials found in land
Oil
Iron
Coal
Water
forests

31. Labor The effort people devote to tasks for which they are paid
Medical care by a doctor
Classroom instruction by a teacher
Tightening of a bolt by an assembly-line worker
Labor is the human input into production
the supply of workers available and their productivity
An increase in the size and the quality of the labor force is vital if a country wants to achieve growth

32. capital
Human-made resources that is used to produce other goods and services
Two types—physical capital and human capital
Physical capital—human-made objects used to create other goods and service—also known as capital goods
Human capital—the knowledge and skills a worker gains through education and experience
The more skills a worker gains, the more productive he or she becomes
Buildings, roads, industrial plants, machinery, tools, processes, patents
Physical and human capital are equally important

33. Doing the dishes
A family of 6 people (human capital) washes the dishes after every meal (breakfast lunch and dinner)
That is 21 meals a week
It takes 30 minutes per meal for 2 people to scrape, stack, wash, dry, and put away dishes
It takes the family 21 hours a week cleaning dishes

34. Doing the dishes If the family had a dishwasher (physical capital)
It takes 1 family member 15 minutes after each meal to load the dishwasher
It takes another family member to put away the dishes at the end of the day
The chore that took 21 hours a week now only takes the family 7 hours to complete

35. Doing the dishes Benefits of using capital Extra time (14 hours)
More knowledge—can apply knowledge of using a dishwasher to other appliances
More productivity—family members can sue their resources and labor to do other chores, to learn other skills, or to simply enjoy themselves. Every family member benefits.

36. Scarcity and the factors of production
All goods and services are scarce because the resources used to produce them are scarce

37. Scarce French fries Potatoes from afield in Idaho
Ten gallons of water irrigated the plot where the potatoes grow
Nurtured with fertilizers and protected with pesticides
They are then harvested, processed, frozen, and transported to Elizabethton
They are fried in corn oil from Nebraska and sprinkled with salt from Louisiana and served at Dairy Queen

38. Scarce French fries?
All the factors of production used to produce those French fries are scarce
Land and water is limited
Labor to grow the crop and harvest, process, transport, and cook the potatoes is limited by the size, time, age, and energy of the population
The physical capital available to create the French fries is limited– farm machines and cooking equipment

39. All goods and services are scarce
This applies to blue jeans, cell phones, or a space shuttle
No matter the good or service, the supplies of land, labor and capital used to produce it are scarce
What do all these have in common?

40. Alternatives! Each one has an alternative
Society has the right to choose which alternates they want the most—the study of economics
The study of how society seeks to satisfy their needs and wants by making choices

41. Drawing on your new knowledge of the definition of economics and our class discussion, answer the following questions:
a. Name four things you know about economics.
b. How does economics relate to your life? How does it affect your family?
c. What role do you play in the economy?