Presentation on theme: "Standard SSEF1 The student will explain why limited productive resources and unlimited wants result in scarcity, opportunity costs, and tradeoffs for individuals,"— Presentation transcript:
1 StandardSSEF1 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 benefitsVoluntary Exchange (trade):When a person agrees to participate in a transaction (trade) because it makes them better off.
5 Key Concepts Incentives Matter Drives ChoicesWhen 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 incentivesSociety is governed by written and unwritten rules that are the core of an economic systemPriceTrade/BarterBehaviorSocial interactionLaws
7 Key Concepts People Gain from Voluntary Trade People trade when they believe the trade makes them better offPeople 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 MakingWhen marginal benefits equal or outweigh marginal costs
8 Key Concepts Everything has a cost There is no such thing as a free lunchEvery 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 valuevalue is determined by preferences of buyers and sellers
12 What do we exchange?Services: A work performed for someone by someone elseGoods: 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 wantBecause resources are limited, people must choose some things and give up othersOr