1. Chapter 1
What is Economics?

2. Why do we study Economics?

3. We Make Economics Decisions Everyday

4. What is Economics?

5. Ever wonder where it all….
… came from ??

6. What is in a Bowl ….
… of economics?

7. Let’s get started already!!

8. Chapter 1
What Is Economics?
Mr. John T. Caldie

9. Economics in a Market Economy
In the United States, no one is assigned to produce a certain product.
In the United States, no one is assigned to offer their service.

10. All products are produced voluntarily in a placed called a market.
1. Market - an arrangement that allows people to make exchanges
with one another.
2. People of their own free will make exchanges with one another.
3. This is called a “volunteer exchange.”

11. A Market Economy is the result of volunteer exchanging of goods and services.

12. Studying the markets and way of production of goods and services is important.
The study of people producing and exchanging things of value to get the goods
and services they want is called ECONOMICS.

13. Productive Resources: What are the Basic Elements to Produce Goods and Services.
A. Resources are the basic elements to produce goods and services.
1. The three types are:
a. Natural Resources
b. Human Resources
c. Capital Resources

14. Natural Resources
1. Unaltered gifts of nature, such as minerals, timber, and metals use to
produce goods and services.
Human Resources
1. Labor, the physical and mental efforts people use to create goods and services.
Capital Resources
1. Consists of the building, tools, and machines people use to produce goods and
services.

15. All resources are scarce.
1. There is not enough of everything for everyone.
2. Scarcity can change if the amounts of resources available relative to people’s
wants.

16. Scarcity in Economics
A. All resources in economics are scarce.
B. Scarcity is the results of an inability to satisfy all of everyone’s wants.
C. Everyone faces scarcity.
1. Time is scarce.
2. Resources are scarce.
3. Labor is scarce.
D. Goods and Services are scarce because our resources are scarce.

17. Scarcity

18. Opportunity Cost
A. Not only are resources scarce but they can only be used one way at a time.
B. People choose to use a resource for one purpose and allocate the chance to use
it for another.
C. Opportunity Cost is the best alternative you give up when making a choice.
D. Businesses: hire people, build a store, fancy signs: may not be able to stock
shelves with complete inventory because they give up one thing for another.

19. Opportunity Cost

20. Every choice involves benefits and costs.
1. Marginal Cost or Marginal Benefits - the extra or additional cost of a decision.

21. Trade Off’s
1. Trade-Off - is a choice that involves giving up some of one thing to have more
an another.

22. The Basic Economic Choices
A. All people make economic choices.
B. Everyone weighs the cost and benefits of their choices.
C. People choose the kinds of goods and services in a free market economy.
1. in the United States, government does not make those decisions.
D. When there is a “want” someone will produce a good or services.
E. People produce goods and services.
1. Goods and Services are produced with some limits set by government.
F. Other parts of the world, the government makes those choices.
1. Socialist or Communist States
2. Some parts of France, Germany, England, and even America (Socialism)
3. China, Cuba, and North Korea (Communism).

23. Macroeconomics is the study of the economy as a whole.
1. Usually within a country or a certain boundary, i.e. country, state, city, etc.
2. Seeks to understand economy-wide issues, such as inflation, unemployment, poverty, or
any long-term economic growth.
Microeconomics is the study of individual consumers and businesses.
1. Examines the choices that individuals, families, and businesses make.

24. Why Study Economics? Study for the test!
Read the chapter in the book and learn the notes.
Spend more then just 15 minutes the night prior to the test.