Unit 1: An Introduction to the Study of Economics Lesson 1: What is Economics?

Do Now: What comes to mind when you hear the word scarce? List three items you might think are scarce.

Definitions 1.economics: the study of choices that people make to satisfy wants and needs ●want: item that is desired ●need: something that is necessary for survival

Definitions 2.microeconomics: the study of behavior and decision-making of small units within an economy (ie…consumers, producers) 3.macroeconomics: the study of behavior and decision-making of an entire economy (ie…inflation, unemployment, poverty)

The Dilemma 1.scarcity: condition that exists due to a limited amount of resources to meet unlimited wants and needs

The Dilemma Scarcity vs. Shortage

The Dilemma 2.factors of production: limited resources needed to produce goods and services ●land: natural resources (ie…fossil fuels) ●labor: human resources (ie…work force) ●capital: manufactured resources (ie…drill) ●entrepreneurship: risk-taker who pools resources together to create products

The Dilemma 3.Products ●good: physical object ●service: action performed for another

Checking for Understanding 1.The study of the choices people make to satisfy wants and needs is called… a. technology b. economics c. microeconomics d. macroeconomics

Checking for Understanding 2.Scarcity requires… a. choices b. production possibilities c. abundant resources d. efficiency

Checking for Understanding 3.The factors of production are… a. capital resources, entrepreneurship, goods, and services b. natural resources, human resources, services, and entrepreneurship c. goods, services, human resources, and capital resources d. natural resources, human resources, capital resources, and entrepreneurship

Checking for Understanding 4.The buildings, structures, machinery, and tools used in the production process are called… a. consumer goods b. capital goods c. natural resources d. human resources

Choices, Choices, Choices! 1.trade-offs: an alternative that is sacrificed when a decision is made ●individuals: exercise or read? ●businesses: wakeboards or snowboards? ●societies: “guns or butter”?

Choices, Choices, Choices! 2.opportunity cost: the value of the most desirable alternative that is given up when a decision is made

Choices, Choices, Choices! 3.production possibilities curve: a graph that shows alternative ways to use an economy’s resources 4.production possibilities frontier: the curve on the graph that shows the maximum possible output for a specific economy

underutilization of resources efficient use of resources impossibility given available resources efficient use of resources

Checking for Understanding 5.Alternatives that we give up when we choose one course of action over another are called… a. capital b. trade-offs c. possibilities d. opportunity cost

Checking for Understanding 6.The value of the most desirable alternative given up as the result of a decision is called.. a. capital b. trade-offs c. possibilities d. opportunity cost

Checking for Understanding 7.A production possibilities curve illustrates all the… a. technological changes that help to increase production b. choices a person can make between products c. economics choices a society can make d. combinations of two goods or services that can be produced

Checking for Understanding 8.An increase in available resources will have which of the following effects on the production possibilities curve? a. The curve will shift upward b. The curve will shift downward c. The curve will shift left d. The curve will shift right