What Is Economics? Unit 1 Lesson 1

What is Economics? Economics is the study of how people and countries make decisions about how to use their scarce resources in the most efficient way. What are the issues that are in the news right now that deal with economics?

What is Economics? Economics is also a way to look at how choices are made in a country or society. Choices are the acts of deciding on and selecting what is wanted most. Choices have to be made on how money will be spent because there is no way that a country or person can do all the things that they want. How do you see this happening? Where do you see this happening the most?

What are Resources? Resources are anything that people use to make things or to do work. There are three basic types of resources that are used everyday in economics. Labor is the work that is done by people in a community. Some of this work is paid in wages and sometimes the work is paid in other ways. Capital refers to all money, machines, buildings and tools needed to create a business or get a job done. Natural resources include all raw materials found on Earth, examples of this are oil, lumber, land, water.

How Do We Choose What to Do With the Resources? When making choices, people and societies and countries need to evaluate what is a need and what is a want. A need is something that is necessary to remain alive. A want is something that is NOT necessary to survive but does make life easier or better.

Examples of Needs and Wants Needs Wants

What Impacts the Economy? There are several different factors that impact how an economy runs. One of the biggest issues that drives an economy is the issue of scarcity. Scarcity is the most basic of all economic problems. Scarcity happens when there is not enough of an item or resource to meet peoples’ needs and wants. Countries have scarcity because their wants are greater than their resources.

How do We Deal with Scarcity? Resources are scarce because it can only be used once. If you are using land (resource) to grow crops on it cannot be used to build a golf course on. If you have $20 in your pocket and buy a new basketball, you can’t use it later to buy dinner for a friend. This is called a trade-off. Trade-off is giving up one thing for another. This is done in all aspects of economics; individuals, societies, governments, countries, etc.