Intro to Economics

Bell-Ringer What does the term Economics mean to you? What motivates individuals towards economic success? RSA- https://www.youtube.com/watch?v=u6XAPnu FjJc

What is Economics? Study of how we make decisions in a world in which resources are limited Study of how things are made, bought, sold & used Where do these products come from? Who makes them? How do they get to stores? Who buys them? Why do people buy them?

Needs v. Wants Activity One side of the room represents Needs One side represents Wants I will put forth a number of statements, then you will move to the appropriate side of the room Example-Internet Access If you think it is necessary for survival, move to the Needs side. If you disagree, move to the Wants side of the room Be ready to explain your choice!

Needs & Wants Individuals have many needs required for survival, such as food, clothing & shelter Enormous number of wants, or things we would like to have, such as entertainment, vacations & other items that make life comfortable and enjoyable Choices we make are based on the fact that we do not have enough productive resources to satisfy all our wants & needs

Economic Models Economic Models-theory that tries to explain human economic behavior; Two main models… Microeconomics-study the behavior & decision-making of small units such as individuals and businesses Micro v. Macro- https://www.youtube.com/watch?v=DJG- liA19eY Macroeconomics-study the economy as a whole and decision- making by large units such s governments or whole industries or societies

Economic Systems Way of producing the things people want and need Country’s economic system helps determine how basic economic decisions will be made U.S.-Free Enterprise Capitalism Under a Free Enterprise System, businesses are allowed to compete for profit with a minimum of government interference

Scarcity Limits on, or scarcity of, resources forces people to make careful economic choices Goods & Services a country can produce depend on its resources Resources-the things used in making goods and providing services Include tools, natural resources (wood, soil & water), and human resources (people, who provide necessary labor, skills, and knowledge to produce the country’s goods & services)

Scarcity Country with many resources is capable of satisfying its people’s wants and needs better than a country with few resources Scarcity of resources affects the economic decisions a country and its people make Affects decisions concerning what and how much to produce, how goods and services will be produced, and who will get what is produced

Scarcity & The Need to Choose Scarcity-occurs whenever we do not have enough resources to produce all the things we would like to have Because of Scarcity, we have to make choices among alternatives Comparing prices and makes choices based on his or her limited resources Afford to buy a small or big car, own a home or rent, purchase brand-name or generic, etc.

What to Produce Major choice that a society has to face Variety of Options Making weapons for defense or producing services for people who are retired/too ill to work Any civic leader in any community in the U.S. could extend this list almost indefinitely, given the wants and needs people have in their own communities

How to Produce After deciding what to produce, a society must decide how these goods and services will be produced If we need more crude oil to satisfy our energy needs, should we allow drilling in an Alaskan wildlife sanctuary?  Offshore? How much pollution should we allow manufacturing firms to generate?  Businesses like to produce as cheaply as possible, and that sometimes means leaving waste behind that may pollute the environment

For Whom To Produce After goods & services are produced, a society must determine how the goods & services will be distributed among its members Most goods & services in U.S. are distributed to individuals and businesses through a price system Other economies may distribute through majority rule, lottery, first-come-first-served basis, sharing equally, military force or a variety of other ways

Trade-Offs Alternative you face if you decide to do one thing rather than another Does not apply only to decisions involving money Study for a Test or Go to a Movie with friends? Marshmallow Project- https://www.youtube.com/watch?v=Yo4WF3cSd9Q Country may want to invest more in Education Less money available for other areas (Space exploration or Defense) Individuals, families, businesses and societies make trade- offs every time they choose to use their resources in one way and not in another

Opportunity Cost Cost of the next-best use of your time or money when you choose to do one thing rather than another Includes more than Money All possible discomforts & inconveniences linked to the choice Cleaning the House-price of cleaning products as well as the time you could spend doing other things, such as listening to music or visiting friends When you make a trade-off, you lose Ability to engage in your next highest valued alternative In Economics, opportunity cost is always an opportunity that is given up

Opportunity Cost---Examples https://docs.google.com/document/d/1PsD1JKFc cWBIbU5GM5cxy9hfnEKfMB- yErlzEaUAIKQ/edit?usp=sharing

Additional Videos-Future Topics! RSA-Crisis of Capitalism: https://www.youtube.com/watch?v=qOP2V_np2c0 RSA Short-Growth is Not Enough (GDP): https://www.youtube.com/watch?v=2_AMEAnWyRk RSA- What Motivates Us- https://www.youtube.com/watch?v=u6XAPnuFjJc