1. Unit 8: Introduction to Economics

2. The Basics of Economics

3. I. What is Economics?
The study of how we make decisions in a world where resources are limited
We have many needs and wants, but we have to make decisions because of scarcity

4. II. Economic Decision Making
Because of scarcity, every government, business, and individual has to answer 3 questions:
What to produce?
How to produce?
For whom to produce?

5. III. Economic Models
To help us make economic decisions, we will use economic models
Ex. Charts, graphs

6. Types of Cost

7. I. Economic Decision-Making
Every decision made has some type of cost or consequence

8. II. Choices
Trade-off: the alternative you face if you decide to do one thing rather than another
Ex. You can go to the movies or study for your economics test

9. Opportunity Cost: the cost of the next best alternative use of time and money when choosing to do one thing rather than another
Go to the movies—do poorly on your test, fail the EOC
Study for the test—miss the fun with your friends

10. III. Other Types of Cost
Fixed costs: Expenses that are the same no matter how much or how little you produce
Ex. Mortgage payments, property taxes
Variable costs: Expenses that change when the # of items produced changes
Ex. Salaries, materials, light bills

11. Total Costs: fixed costs and variable costs added together
Fixed + Variable = Total

12. Class Starter
Who is responsible for paying the cost of incarcerating criminals?
Which set of laws simplified Roman Laws?
List some examples of civic duties.
Which amendment contains the Equal Protection Clause?

13. Factors of Production

14. I. Producing Goods and Services
We produce goods and services for people to buy
Goods: tangible products that we use to satisfy our wants and needs
Services: work performed by a person for someone else
Gross Domestic Product (GDP): the total $ value of all final goods and services produced in a country during a single year

15. II. Factors of Production
Resources necessary to produce goods and services
Land, labor, capital, entrepreneurship

16. Land (natural resources): things we find in nature that make production possible
Ex. Trees, animals, water, air
Labor: human effort directed toward producing goods and services
Ex. Doctors, lawyers, teachers, plumbers, cashiers

17. Capital: previously manufactured goods used to make other goods and services
Ex. Sewing machines, projectors, pens, hammers, $
Entrepreneurship: the ability to start a new business
Entrepreneur—someone who starts a business; person has to be innovative and willing to take risks to make the profit