ECONOMICS UNIT ONE INTRO TO ECONOMICS

What is Economics? Economics-defn macro vs. micro (defns) Do we have all of the goods and services we want? Resources (defn) are scarce (defn) This leads us to participate in voluntary exchanges. How do all these exchanges come together? Who organizes them? What difference does it make?

3 Economic Questions: What goods and services are to be produced and in what quantities? How are these goods and services to be produced? Who receives and consumes them ?

4 Factors of Production (inputs): 1. Natural resources (land)- ex. Minerals, timber, air, water, fish, natural gas

2. Human resources (labor)- ex. Labor, mental abilities, knowledge, skills

3. Capital resources (capital)- ex. Buildings, tools, machinery, materials

4. Entrepreneurship- ex. Starting a new business, expanding a current product or service, inventing/ designing things

Scarcity (defn) What causes it? Who does it affect? Scarcity forces us to make choices which leads to opportunity costs (defn). Why do we want to analyze opportunity costs? This leads to trade-offs (defn). All choices involve benefits and costs- list some examples: –

Marginal-additional (should I go get my Master’s Degree?) Why do we need to weigh marginal costs vs. marginal benefits? If I give up some of dinner, I can have more dessert!

Production Possibilities Frontier: Purpose- to show alternative ways to use an economy’s productive resources both efficiently and must be fully employed It shows us the opportunity cost of a decision If one changes so must the other- in which direction? Growth (movement to the right) occurs b/c of technology or an increase in resources such as more workers or a new discovery. What are some examples?