1. What is Econ and how does it effect Americans?
Economics
What is Econ and how does it effect Americans?

2. Economics- the study of how people make choices about ways to use limited resources to fulfill their wants.
Microeconomics- deals with behavior and decision making by small units such as individuals and firms.
Macroeconomics- deals with the economy as a whole and decision making by large unites such as governments.

3. Needs vs. Wants Needs- Food, clothing & shelter
Economists consider everything else a want.

4. SCARCITY: The basic problem of Economics
Scarcity exists because people’s incomes and time are limited.
This means that people do not and cannot have enough time to satisfy their every want
Scarce resources require choices about uses of the factors of production: land, labor & capital

5. The factors of production
Land- natural resources, land and water
(Gold, Silver, trees, fish)
Labor- human effort directed toward producing goods and services
Goods- items people buy Services- activities done for others
Capital-the manufactured goods used to make other goods and produce other services.
(machines, buildings & tools used to make cars)

6. Entrepreneurship 30% of all new businesses fail in the 1st 2 years
49% fail after 5 years

7. Trade-Offs
Sacrificing one good or service to purchase or produce another.
Examples-
Deciding to go to college instead of work full time.
You are giving up the opportunity to start making money right away. (opportunity costs)
You are giving up 4 years of time to study.
Buying a car
You are giving up new clothes, eating out, and a vacation

8. Opportunity costs: It is the next best option that you gave up
Example:
You have saved $500 and you are thinking about buying the following:
Mountain bike
Laptop
Shotgun
Camera

9. Production Possibilities Curve
Shows maximum combinations of goods and services that can be produced from a fixed amount of resources in a given period of time.
Reveals trade offs and opportunity costs.

10. Practice: P #’s 20-23