1. The Fundamental Economic Problem
Economic Choices: Well informed citizens make rational economic choices everyday. The choices we make are based on the fact that we do not have enough resources to satisfy everybody’s wants and needs. The study of economics will help citizens think about the choices that they are making.

2. Scarcity All individuals have needs and wants
Needs: items needed in order to survive: food, water, clothing, shelter
Wants: items that we would like to have: boats, fancy cars, vacations, concert tickets, etc.
-items that makes our life more comfortable
Scarcity occurs when we do not have enough resources to produce all of the items that we would like to have
-people do not have enough time, income, or other resources to satisfy their every desire
-because of scarcity, we must make choices among the alternatives
-the smart consumer considers if they can afford to buy the BMW vs the Toyota based on their limited resources

3. Scarcity and shortage are not the same thing: scarcity always exists, whereas, a shortage is only temporary
Society must determine what to produce, how to produce, and for whom to produce
What to produce- do we use the limited money that we have for education or healthcare
How to produce: do we drill off the Florida coast to get more crude oil or do we restrict drilling to the areas we drill now to produce more energy
For whom to produce: where will the new school be built

4. Article Questions You will be placed in groups and read the article.
You will answer the following questions:
How do the author’s choice of words and the tone of the language used illustrate the author’s point of view on the topic?
What words really catch your attention here? Why do those words stand out?
How did Table 1 and Figure 1 help you understand author’s points?
What is the author’s point of view on the topic?
Explain the cause and effect relationship in the text.
What is the overall tone of the text?

5. Types of Resources
Only a certain amount of resources exist, regardless of wants and needs
Traditionally, economists have classified resources as :
Land- any natural resource, not just surface land
-the most important in economic terms are land and mineral deposits
-the location of the land establishes its value as a resource
labor- the work people do
-often called a human resource
-includes anyone who works

6. Capital- all the property people use to make other goods and services
-includes all machinery used to make a product
Entrepreneurship- the ability of individuals to start a new business, to introduce new products and techniques, and to improve management techniques
-all changes in business organization is part of
-involves initiative and individuals willing to take risks to make profits
-succeed when they produce new products, improve an existing product or produce it more efficiently, or reorganize a business to run more smoothly

7. Technology- added to the list of resources by some economists
-any use of land, labor, and capital that produces goods and services more efficiently
-today, technology usually describes the science to develop new products and new methods for producing and distributing goods and services

8. Using Economic Models Economic models are economists' theories
The model represents a simplified representation of the real world
The models show how people will react to changes in the economy or to predict what would happen if something in the economy should change
Many models appear as some type of graph
The models are based on assumptions, or things that we take for granted as true
-we use them as facts even though we can’t be sure that they are facts
Models can be revised
If an economic model results in a prediction that turns out to be right, the model can be used again
If an economic model results in a wrong prediction, the model might be changed to make better predictions the next time

9. Creating the Economic Model
An economist considers a model good if it produces useful material for analyzing the way the real world works
An economist begins by forming an idea about the way things work, like a scientist formulates a hypothesis
The economist then collects facts and discards those that are not relevant
Once a conclusion is reached, the only way the economist can determine if the model works is to test it
For example: As the price of CD’s is lowered, more will be purchased

10. Testing the Economic Model
The economist tests the model in the same way that other scientists test hypothesis by developing educated guesses or predictions used as the starting point for the investigation
The economist would collect data on whatever they are investigating
For example: 100 CD’s were sold at $14, 200 CD’s were sold at $12, and 350 CD’s were sold at $10

11. Applying the Economic Model
Much of the work of the economists involves predicting human behavior in particular situations
Sometimes human behavior is not always predictable
As a result an economists answer to a specific problem may not work for every one
For Example: 100 CD’s at $14 = $1,400
200 CD’s at $12 = $2,400
350 CD’s at $10 = $3,500