Vocabulary  Economics- The study of making decisions in a world with limited resources.  Scarcity- The fundamental economic problem.  Factors of Production- Resources necessary to produce goods & services.  Productivity- The rate at which resources can be turned into goods/services.  Entrepreneur- Someone who starts a business.

Warm up?  What is the difference between something that you need and something that you want? Give an example of something you need and something that you want.

Economics

What is economics?  The study of how we make decisions in a world where resources are limited  AKA the science of decision making

What is the fundamental problem with economics?  SCARCITY  When we do not have enough resources to produce all the things we would like to have  You have to make choices among the alternatives  Needs: things required to survive such as food, water and shelter  Wants: things we would like to have such as tv, internet, video games, etc.

When starting a business you must ask yourself 3 questions:  1. What to produce  Have to figure out what products are needed right now and are the resources available  2. How to produce  How are you going to make the good  3. For whom to produce  Who is your targeted audience? Older people, babies, teenagers, young adults, etc.

What do economists use to collect data?  Economic models  Simplified representation of the real world that are used to explain how the economy works or to predict if your product would survive the market  Problem: based on assumptions

You want to open up a new business but you’re not sure what to sell.

What to provide?  Goods  Tangible products like books and cars Or  Services  Work that is performed for someone else  Exp: Haircuts, garbage pickup

Factors of Production  Resources necessary to produce goods and services  4 kinds  Natural resources (land)  Labor  Capital  Entrepreneur

Natural Resources  Refers to all the gifts of nature  fertile fields, rainfall, forests, mineral deposits, etc.  Can be renewable or non- renewable  Renewable resources can be replenished over time…Ex: trees, sunlight  Nonrenewable resources is a resource that cannot be replenished over time…Ex: oil

Labor  The nation’s labor force or human resources  Refers to both the physical and mental efforts that people contribute

Capital  The tools, machinery, and buildings used to make other products  EXP: bulldozers, trucks, hammers, saws, drills, etc.

Entrepreneur  The person who starts the new business

Productivity  This is the rate at which resources can be turned into goods/services.  Increased productivity means more goods/services available to buyers and financial rewards for laborers

reflection  What is economics?  What is the fundamental problem with economics?  What 3 questions should you ask yourself when starting a business?  What do economists use to collect data?  Summarize the difference between goods and services.  What are factors of production?  What are the four kinds of factors of production?  Summarize the difference between renewable and nonrenewable resources.  What two attributes are a part of labor?  What are examples of capital?  What is an entrepreneur?  What is productivity?

Activity  Create a pamphlet for a potential business you’d like to open. Your pamphlet must containing the following:  Four Factors of Production with definitions  3 Examples for each factor of production as they pertain to your business  Explanation of what will happen to your business if you experience a scarcity in that factor.  Illustration (picture) for each.

Closing?  What would life be like if no economic scarcity existed?