Economics

Questions What is an economy?

A system of consuming and producing

Who gets what and why? Why is there poverty?

People must compete to get scarce resources. Some people lack ability, know-how, or resources of their own to compete

What is the difference between a good and bad economy?

A good economy has a lot of producing and consuming which increases every year- a bad economy has decreasing amounts of producing and consuming year after year

What are the differences between supply and demand?

Supply has to do with businesses and producers, and demand has to do with consumers and buyers

Can an economy be measured and predicted?

Keeping track of the dollar amount of how much is produced every year

How can an economy grow?

We produce more next year than we did last year

How are our lives affected by the economy?

If there is less productivity, our standard of living may go down

What happens when we try to influence the economy?

We usually do not succeed. The economy is too big and too complex to be controlled.

Why are some countries so poor?

The wealth of a country is greatly linked to the resources it has in terms of natural or human.

What is the Economy? During the Great Depression- easy to say our economy has never been worse since the turn of the 20 th century (The Grapes of Wrath)

One main symptom of our floundering economic state was a high rate of unemployment Few jobs available for our labor force

If only a few people are working, then that must mean that very little is being produced Little production of goods and services

Depressed level of buying and a low level of production- condition lasted more than 10 years

An Economy is a situation in which people produce goods and then other people consume those goods Material goods are not the only things that people consume

Services are actions or activities that are done for others Ford and GM make cars for consumption by their customers- Lawyers and accountants provide services that customers need

When the economy is in a slump, what do you think are some of the impacts on our society?

Crime, poverty, less government revenue

What is a definition for bad economy?

Less is produced and consumed from year to year

Scarcity and Opportunity Cost Fundamental problem of economics is Scarcity People have unlimited desires and wants, but our resources are too limited to satisfy them

Resulting condition leaves people with a multitude of difficult decisions We all have wants and needs

Needs include things like food and shelter Necessary to our survival Cars and fancy clothes may be wants that people have

Wants are not vital to life, but we desire them just the same Everyday, we must make decisions, based upon our resources, about how to satisfy our wants and needs

Competition exists because of the scarcity of goods Limited supply of resources that we desire People may want many goods and services but there is never enough to go around

If you decide to go buy a new Ipod, that may mean you will not have enough money for Prom- you have a limited amount of money available

If you spend the money on one thing, it will not be available for another This dilemma is fundamental to the study of economics

Difficult choice between alternatives for our available resources will sometimes result in sacrifice

Example: you have an opportunity to go to a baseball game and you want to go- however, a new group that you really enjoy is giving a concert at the same time the game is scheduled

You have the time and money to do only one of the two You have a difficult choice to make Have to weigh the options

Your team may be in the playoffs, but you’ve never seen this band before Opportunity cost of attending the game is not being able to attend the concert

In the end, you have to figure out which one is more important Losses and benefits of your decision are called trade-offs

Go to the concert- it was a lot of fun, and you even made some new friends You notice in the paper the next day that your team won in the last minutes of the game

This may have been a rather tough sacrifice Cost of what you sacrifice is called the opportunity cost

Imagine you are in charge of a large corporation and you need to build some new factories. There will be numerous resources that must be allocated and many trade-offs will need to be considered

Economists are consulted when large decisions like this are required

Questions: A. If you decide to get a job right after high school that pays $22,000 per year instead of going to college, what are some of the trade-offs and opportunity costs in the immediate future?

B. What about the trade-offs and opportunity costs over long term?