1. How Economic Systems Work
Intro to Economics
How Economic Systems Work

2. Needs vs. Wants Needs are things we must have to survive Food Water
Shelter
Clothes
Wants are things we desire to make life more comfortable and enjoyable
Entertainment
Vacations
Toys

3. What is Economics?
Economics is the study of how we make decisions in a world in which resources are limited
Our wants vs. our needs
Economics also includes how things are made, bought, sold and used

4. Micro- and Macroeconomics
Microeconomics- look at the small picture; study the behavior of individuals and businesses
Macroeconomics- look at the big picture; study the economy in whole countries, whole industries, or societies
Economic Model- the theory that tries to explain human economic behavior

5. What choices do we have to make?
Goods: physical objects such as shoes and shirts
Services: actions or activities that one person performs for another (ex: haircuts, tutoring, dental checkups, etc)

6. Why do we make certain economic decisions?
Scarcity!!!

7. What is scarcity?
Scarcity is when there is a limited supply available to meet unlimited wants
Scarcity occurs whenever we do not have enough resources to produce all the things we would like to have
Scarcity forces people to make choices about how they will use their resources

8. What are some things you WANT?
List 5 things you want more than anything 

9. Trade-Offs
Out of the 5 things you want, choose the thing you want THE MOST!
All items not picked are called Trade-Offs

10. Making Trade-Offs
A trade-off is the alternative you face if you decide to do one thing rather than another
For example, you use a field to grow tobacco means the field cannot be used to grow soy beans.

11. Opportunity Cost
Opportunity Cost is the cost of the next best alternative use of time and money when choosing to do one thing rather than another
In other words, opportunity cost is what you must forgo in order to get something
Example- If you decide to stay after school for tutoring, the opportunity cost is hanging out with your friends

12. Shortage
Shortage: NOT the same as scarcity. A shortage occurs when producers will not or cannot offer goods or services at the current prices
Can be temporary or long term (wars and droughts can create shortages)

13. GOAL OF ECONOMICS
Solving the problem of scarcity!