Economic Resources

Three Questions of Economics 1. What goods shall we produce? – Where do decisions reside? Consumers? Government? Military? Private? public? 2. How shall these goods be produced? – Government OR privately owned businesses 3. For whom shall the goods be produced? – All forms of government says production is for people.. But in what type of distribution?

Definition of Economics Economics is the study of the allocation of the scarce means of production toward the satisfaction of human wants Means of Production – Land- location and scarcity make land valuable – Labor- all paid work. Labor scarce when only a certain number of people are physically, mentally, or emotionally capable of doing the needed work – Capital-money and all things needed to produce goods and services. – Entrepreneurial Ability-entrepreneur recognizes ability to make profit, raise money to open business, hires and manages business. Able to combine land, labor, and capital to make money.

Unlimited Wants Economics is allocation of scarce resources PLUS the satisfaction of human wants. Opportunity Costs- scarcity requires us to make choices. The thing you give up is called the “opportunity cost” of your choice

scarcity What does it really mean when a resource is scarce? Scarcity, in general terms, means that the demand for something is much greater than the supply, or there is not enough money to buy it. The exact definition in economics is that there are insufficient resources to satisfy everyone's needs and wants. Whether you're talking about oil, from which we get the gasoline that powers most of our cars, or corn, even seats in a movie theater, there isn't enough for everyone to get what they want at a zero price. You know something is scarce if you try to offer it for free, and you don't have enough of it for everyone who stands in line to get it.

Opportunity cost When economists refer to the “opportunity cost” of a resource, they mean the value of the next-highest-valued alternative use of that resource. If, for example, you spend time and money going to a movie, you cannot spend that time at home reading a book, and you cannot spend the money on something else. If your next-best alternative to seeing the movie is reading the book, then the opportunity cost of seeing the movie is the money spent plus the pleasure you forgo by not reading the book.“opportunity cost”

Opportunity Cost

Follow-up What is the middle class? – Paste in a paragraph of a source that objectively defines “middle class” include citation – Paste in a short article that makes an argument about the issue of middle class in some way. Include citation Opportunity Cost – Provide a definition in your own words – Describe an time-based opportunity cost you made this week – Describe a money-based opportunity cost you made this week