Economics & You

You are involved in economics every day of your life. What is Economics? Economics is all that deals with the production, distribution, and consumption of goods and services. You are involved in economics every day of your life.

How does economics relate to MY life?

Types of resources are natural, human, capital and entrepreneurship. factors of production The factors of production are resources that are used in the production of goods & services. Types of resources are natural, human, capital and entrepreneurship.

We all use resources every day.

Scarcity is the inability to satisfy all wants at the same time. It exists because human wants for goods and services exceed the quantity of goods and services that can be produced from all available resources.

Scarcity Scarcity forces Tradeoffs Since all resources and goods are limited choices must be made. Scarcity forces Tradeoffs

Sometimes there are many choices.

Sometimes only a few choices. ← Check out the shoes.

Choice Choice is selecting an _item_ or _action_ from a set of possible alternatives. Consumers face scarcity and must make choices and incur opportunity costs.

Since resources are limited… You have to make smart choices.

Choice Businesses face scarcity and must make choices and incur opportunity costs.

Choice Governments face scarcity and must make choices and incur opportunity costs. For example, money spent on roads cannot be spent on education—or whatever would be the next best alternative.

Opportunity Cost Opportunity Cost of your choice is the value of the of the best alternative given up. Individuals, businesses and government must consider the value of what is given up when chosing how to use resources.

Incentives Economic incentives are things that incite or motivate someone to make a choice. Incentives are used to change economic behavior. Incentives can be positive or negative

Incentives What incentives do your parents use to motivate you? What incentives do your teachers use? Coaches? Employers? What incentives do businesses use?

Incentive Challenge