Introduction to Economics Mr. Knight

Definition of Economics The study of choices that people make to satisfy their needs and wants

Kinds of Economics Microeconomics: the study of choices by economic actors –Households, companies –Looking at only one single economic actor Macroeconomics: examines the behavior of entire economies –Unemployment in the United States

Two Groups of Economic Decision-Makers Consumers: People that decide to buy things Producers: People who make things to satisfy consumers’ needs and wants This network of decision-making is the basis for all economic systems

How do people make decisions? Based on needs and wants –Needs: goods and services necessary for survival –Wants: goods and services consumed beyond what is necessary for survival What is the difference between goods and services? What is a product?

Economic Resources Resource: thing the people use to make or obtain what they need or want Factors of Production: resources that can be used to produce goods and services

Natural Resources Items provided by nature that can be used to produce goods and services –Examples? Only a factor of production when it is scarce and payment is necessary for its use

Human Resources Human effort exerted during production –Physical or intellectual

Capital Resources Manufactured materials used to create products –Capital goods (buildings, structures, tools) and money used to purchase them Consumer goods are the finished products that people buy Some products can be consumer or capital goods

Entrepreneurship Organizational abilities and risk taking involved in starting a new business or introducing new product –Entrepreneurs risk economic failure in return for the possibility of financial gain

Financial Literacy GENERAL DEFINITION The ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial wellbeing Annual Report, President’s Advisory Council on Financial Literacy What kind of information might you need to improve your financial literacy?

Financial Literacy “What” are the Financial Literacy Basics Budgeting Banking Credit & Loans Insurance Investments These are only some of what we will discuss in this class