1. What is Economics?

2. Defining Economics Wants Needs
What fundamental qualities make up Economics?
Versus
Wants
Needs

3. Then what is the definition?
Economics is the study of how scarce productive resources are used to satisfy human’s unlimited needs & wants.

4. The Condition of Scarcity
Our resources are limited…but our desires for goods and services are NOT.
Something is scarce if it has more than one valuable use. Example: your time.
When resources are used to do one thing, they are unavailable to do others.

5. To Choose Is To Sacrifice
Scarcity forces us to make choices.
Choosing an action means we sacrifice doing something else.
The opportunity cost of a choice is the value of what is given up [THE NEXT BEST ALTERNATIVE].

7. Who makes these decisions?
Consumers – the people who decide to buy things
What is the motivation of the consumer?
Get the most for your money.

8. What’s the Difference between a Need and a Want?
NEEDS
WANTS
Those goods and services that are necessary for survival
Food, clothing, shelter
Those goods and services that people consume beyond what is necessary for survival

9. Producers – The people who make the things that satisfy consumers’ needs and wants.
What is the main motivation of the producer?
Provide consumers (you, people with money) with what they value the most while covering their costs of production and making a profit.
Profit: the money made after you pay your bills.

10. What are goods and services?
Physical objects that can be purchased
Pizza, bicycle, shoes
Actions or activities that are performed for a fee.
Lawyers, teachers, plumbers

12. Gross Domestic Product
GDP
The dollar value of all final goods, services, and structures produced within a country’s borders in a 12-month period.
GDP is used to determine a country’s wealth.

13. Questions that Economics answers:
1. What do we produce with limited resources?
2. How do we produce the goods?
3. For whom are the goods produced?

14. Factors of Production
Resources required to produce the things we would like to have.
Combine to make goods and services.

15. Factors of Production
1. Land
2. Labor
3. Capital
4. Entrepreneur

16. Factors of Production
1. Land: These are the “gifts from nature” or natural resources.

17. Factors of Production
2. Labor:
People with all their efforts, abilities, and skills.
What people do to make money.

18. Factors of Production Capital:
The tools, equipment, machinery, and factories used in the production of goods and services.
What a business can resell to make money.

19. Factors of Production Entrepreneur:
Risk takers in search of profits who start a new business or bring new products into the market.
Example: Shark Tank