1. INTRODUCTION TO ECONOMICS
The Study of the Economy

2. WANT v. NEED A NEED is something necessary for survival
A WANT is something that is not required, but you would like to have it.
Examples of NEEDS-water, shelter, food, clothing (in our society MONEY), medical care
Examples of WANTS-more money, electronics, jewelry, brand name clothes
Why is it important to distinguish between the two?

3. WANT v. NEED When can something be considered both a want and a need?
MONEY-We need money to buy goods, but we want more money.
CAR- We may want a car, but we also may need one to get to school/work.
COMPUTER-Computers can be wants, but depending on your job/education it may also be a need.

4. WHAT IS ECONOMICS?
Make a list of any choice you have made in the last 24 hours?
What caused you to make that choice? (Ex.-I ate pizza at lunch b/c I like it and that is what I had enough money for.
How does this choice impact the economy?

5. HOW DO CHOICES IMPACT THE ECONOMY?
CONSUMERS BUSINESSES GOVERNMENT

6. WHAT IS ECONOMICS?
ECONOMICS-the study of how we make choices in a world full of limited resources.
MICROeconomics-The study of how individuals and small businesses make decision.
MACROeconomics-The study of how the government and society makes decisions.

7. SCARCITY RESOURCES-the materials used to make products
SCARCITY-There are not enough resources to satisfy our wants and needs, because our needs are limitless.
SCARCITY will always exist because no matter what we have we will always want and need more.

8. Questions in dealing with scarce resources:
WHAT to produce?
HOW to produce it?
WHOM to produce it for?
Scarce resources force-interdependence (people and governments to rely on each other)

9. 5 Factors of Production
Natural Resources- raw materials supplied by nature used in production
Ex. Wood, iron, oil
Labor- physical and mental capabilities of humans
Ex. Workers
Capital- money and tools used to produce goods and services
Ex. Machines, buildings
Entrepreneurship- person who starts the business
Ex. Bill Gates
Technology- new information to increase productivity
Ex. Computers control making things instead of making by hand

10. CHOICES
Because we have limited resources, we are forced to make choices.
TRADE-OFF-Choosing one thing for another.
(EX) I have $20, lunch cost $12 and the shirt cost $18…I must make a trade-off.
OPPORTUNITY COST-the value of the thing you gave up when making a trade-off.
Any time you make a choice, you give something up.

11. GOODS vs. SERVICES
GOOD-something tangible (you can touch it) that fulfills our wants and needs.
Ex-Table, Clothes, IPOD, Food
SERVICE-something intangible (can’t touch it) that fulfills our wants and needs
Ex-Doctor doing surgery, Barber cutting hair, Gardner cutting the grass.
Because of scarcity, we must pick and choose how we spend our time and money