Introduction to Economics Chapter 18

What is Economics? The study of how people satisfy unlimited wants and needs with limited resources. Why is “decision science” a good name for economics? Why can’t we have it all???? Does everyone make choices? Why? SCARCITY SCARCITY: Lack of a resource

Goods versus Services Goods are tangible items sold for a feeEXAMPLES Services are work performed for a feeEXAMPLES

The 3 Basic Economic Questions What to produce? (What to make?) Availability Profitability How to produce? (How to make g/s?) Efficiency Better, cheaper, faster For whom to produce? (Who gets g/s?) Deservability Affordability

“You can’t always get what you want” trade-off What is a trade-off? Give an example. opportunity cost What is an opportunity cost? Give the answer from the above example. How do opportunity costs play out in the real world? How do budgets affect trade-offs and their resulting opportunity costs? Do activity, discuss and award prizes.

Revenue & Costs What are fixed costs? Examples? What are variable costs? Examples? TOGETHER, these equal the total costs. What are marginal costs? Example? What is revenue? Give examples. Why do businesses fail?

How to make good decisions? Cost-Benefit analysis Do example. Read 19.1 and complete chart and questions.

Exit Ticket Review ____ is the study of how people satisfy unlimited wants & needs with limited resources. ____ is basic problem of economics. List the 3 basic economic questions: Rent is an example of a ___ cost. T/F Economic models are always reliable & predictable. T/F Some trade-offs have no opportunity costs. T/F All people have their basic needs met. T/F Most teenagers satisfy wants with their money.