1. Standard
SSEF1 The student will explain why limited productive resources and unlimited wants result in scarcity, opportunity costs, and tradeoffs for individuals, businesses, and governments.

2. Economic Way of Thinking
Economics explains how people interact within markets to get what they want or accomplish certain goals.
Economics is a driving force of human interaction.
Studying it reveals why people /governments behave in particular ways.

3. Key Concepts Opportunity Cost
Economists main concern = opportunity cost = the best alternative we give up when we make a decision or choice.
Economic decisions are more or less—not yes or no—choices.

4. Key Concepts People choose for good reasons
People will choose alternative that benefits them the most.
Weigh costs and benefits
Voluntary Exchange (trade):
When a person agrees to participate in a transaction (trade) because it makes them better off.

5. Key Concepts Incentives Matter
Drives Choices
When incentives change, people’s behavior changes in predictable ways.
“Free gift with purchase”
Earn a 100 as a grade for being on-time

6. Key Concepts Economic Systems
Economic systems = created to influence choices and incentives
Society is governed by written and unwritten rules that are the core of an economic system
Price
Trade/Barter
Behavior
Social interaction
Laws

7. Key Concepts People Gain from Voluntary Trade
People trade when they believe the trade makes them better off
People gain from voluntary trade.
Trade creates wealth.
When two people trade voluntarily, they give up something they value less for something else they value more.
Rational Decision Making
When marginal benefits equal or outweigh marginal costs

8. Key Concepts Everything has a cost
There is no such thing as a free lunch
Every action has a cost

9. Key Concepts Economics is marginal thinking
Marginal (meaning additional) choices = the effects of additions and subtractions from current conditions.

10. Key Concepts Unintended Consequences
Economic actions create secondary effects.
Sometimes these effects are not always good.
One action can create many unintended consequences.

11. Key Concepts Value of Goods/Services are affected by choices
Goods and Services do not have intrinsic value
value is determined by preferences of buyers and sellers

12. What do we exchange?
Services: A work performed for someone by someone else
Goods: an item that satisfies an economic want

13. Who Exchanges Good and Services?
Consumer: A person who buys or uses goods to satisfy an need or want
(aka., buyer)
Producer: Someone who makes a product for others
(aka., seller)

14. SCARCITY?
Not being able to have all the goods and services you want
Because resources are limited, people must choose some things and give up others Or