FUNDAMENTAL ECONOMIC CONCEPTS CHAPTER 1: WHAT IS ECONOMICS???

SCARCITY AND THE SCIENCE OF ECONOMICS TINSTAAFL-”There is no such thing as a free lunch” THE FUNDAMENTAL ECONOMIC PROBLEM: SCARCITY THE 4 FACTORS OF PRODUCTION: LAND LABOR CAPITAL ENTREPRENEURS THREE BASIC ECONOMIC QUESTIONS WHAT SHOULD SOCIETY PRODUCE?? HOW SHOULD IT BE PRODUCED?? FOR WHOM IS IT PRODUCED??

MEANING AND SCOPE OF ECONOMICS MACROECONOMICS, MICROECONOMICS DEFINITION OF ECONOMICS: “STUDY OF HOW PEOPLE SATISFY COMPETING WANTS AND NEEDS THROUGH THE CAREFUL USE OF SCARCE RESOURCES”. THE STUDY OF ECONOMICS IS BASED ON THE SOLVING OF ECONOMIC PROBLEMS: ECONOMISTS: 1. DESCRIPTION 2. ANALYSIS 3. EXPLANATION 4. PREDICTION These 4 steps help create Economic Models.

ECONOMIC GROWTH PER REGION OF USA 2010

2012 PROPOSED US BUDGET MILITARY SPENDING LAW 20% ENFORCEMENT 8% INFRA- STRUCTURE 5% MISCELLANOUS ?? MILITARY SPENDING 20% LAW ENFORCEMENT 8% BUSINESS AND BANKING REGULATION 8% SOCIAL PROGRAMS 22% EDUCATION 12% TRANSPORTATION 14%

TRADE-OFFS AND OPPORTUNITY COSTS CHOICES DECISION-MAKING GRID-- $30,000 Price Use Cost of Upkeep CAR TRUCK OPPORTUNITY COSTS PRODUCTION POSSIBILITIES CURVE MILITARY GOODS CARS, TRUCKS

SECTION 3: WANTS AND NEEDS GOODS, SERVICES Durable good Non Durable CONSUMERS Conspicuous consumption PRODUCERS VALUE PARADOX OF VALUE UTILITY WEALTH

ECONOMIC INTERDEPENDENCE PRODUCTIVITY PRODUCTION—make a product efficiently. Efficiency is based on: SPECIALIZATION OF LABOR DIVISION OF LABOR HUMAN CAPITAL– investment, time, labor, $$ ECONOMIC INTERDEPENDENCE THE WORLD IS TIED TOGETHER ECONOMICALLY. COUNTRIES DO NOT HAVE THE ABILITY OF EXISTING IN ISOLATION ANYMORE THE USA DEPENDS ON 60% OF ITS LAND RESOURCES FROM OTHER COUNTRIES.

ECONOMIC SYSTEMS AND CIRCULAR FLOW MODELS TRADITIONAL EXAMPLES AND DESCRIPTION STRENGTHS WEAKNESSES COMMAND Dialectic materialism---Thesis—Antithesis--Synthesis CAPITALISM, MARKET, FREE ENTERPRISE (laissez-faire) MIXED-MARKET SYSTEM—John Maynard Keynes, FDR. INVOLVES TAXES, AND GOVERNMENT REGULATION ECONOMIC AND SOCIAL GOALS OF AMERICAN ECONOMY: ECONOMIC FREEDOM ECONOMIC EFFICIENCY ECONOMIC EQUITY ECONOMIC SECURITY FULL EMPLOYMENT PRICE STABILITY ECONOMIC GROWTH TRADE OFFS BETWEEN GOALS:

AMERICA’S ECONOMIC SYSTEM MIXED-MARKET 1. COMPETITION AND FREE ENTERPRISE: ECONOMIC FREEDOM VOLUNTARY EXCHANGE PRIVATE PROPERTY PROFIT MOTIVE 2. THE ROLE OF THE ENTREPRENEUR 3. THE ROLE OF THE CONSUMER 4. THE ROLE OF GOVERNMENT INVOLVEMENT: PROTECTOR PROVIDER AND CONSUMER REGULATOR PROMOTER OF NATIONAL GOALS RESULTING IN A MIXED-MARKET ECONOMIC SYSTEM