Economics Unit Chapter 10 Economics: Close to Home

Economics The study of our efforts to satisfy our unlimited wants through the use of limited resources. Wants > Resources = Scarcity, the fundamental problem of economics! Scarcity forces us to make decisions: -What to produce? -How to produce it? -Who gets what is produced? Goods – products, such as sugar, cars. Services – hairstylist, taxi

Opportunity Cost Opportunity cost is the loss involved in choosing one thing rather than another. It is the result of scarcity! For example, the opportunity cost of watching the hockey game is the opportunity lost of studying for your test! Buying the yellow shirt instead of the red one… the opportunity cost of the yellow shirt is the opportunity lost of the red one. Sometimes as consumers we make the mistake of impulse buying, spur of the moment purchases, without considering opportunity cost.

Supply and Demand Demand (consumers) – the amount consumers are willing and able to buy at a particular price. Supply (producers) – The amount producers are willing and able to produce at a particular price.

Demand and Supply Curves See page 144 text

Equilibrium Price Equilibrium Price refers to the price at which buyers and sellers agree. Best for the economy because it reduces waste…. We sell what we produce! Law of Demand As price goes up, demand goes down As price goes down, demand goes up Law of Supply As price goes up, supply goes up As price goes down, supply goes down Hidden Market/Substitute Effect

Investing Principal – the original sum invested Interest – money earned on the principal invested, (based on interest rate) Compound Interest – interest on your interest

Chapter 11 The Atlantic Economy Sectors of Our Economy Primary Industry Secondary Industry Tertiary Industry Quaternary Industry

Primary Industry PRIMARY INDUSTRY – activities in which people use, extract, harvest natural resources such as water, soil, fish, animals, plants, trees. Products are only slightly altered before they are used. Ex: fishing, farming, mining, agriculture. Natural Resources: materials found in the natural environment that humans can use to satisfy their needs and wants. Natural resources formed the basis of the regions economy for centuries (100’s of years). Some influence our culture – ex. Fishing Today some primary industries are in decline but others remain important to the economy. A decline can be because of: declining resources, a change in consumer demand, or competition from other countries.

Primary industry today is changing in the following ways: fewer manual workers are needed use of technology higher skill level and education needed Fishing – decline in ground fishing led to increase in aquaculture (fish farming). Forests – protect the forest by assigning each province an allowable annual cut (AAC) - many factors are used to calculate this (p. 162) Mining – different types of mining are used to get minerals out of the ground. - minerals are manufactured into many things Farming – includes 3 stages: inputs – anything needed to grow the crop process – what farmers do to bring crops to maturity out puts – crops produced and any waste

Secondary Industry SECONDARY INDUSTRY – process raw materials into finished goods. products are manufactured into goods that are substantially different from original materials goods are worth more (value added). Ex: manufacturing, construction, transportation and utilities (hydro and gas) Related closely to primary industry. Ex: fishing  food processing, ship building

TERTIARY INDUSTRY TERTIARY INDUSTRY – enables customers to obtain and use finished products workers provide services rather than goods ex: sales, repairs, banking, insurance, tourism, hospitality, clerks, doctors

QUARTERNARY INDUSTRY QUARTERNARY INDUSTRY – involves specialized technology Ex of workers: research scientists, computer software designers. Often grouped with Tertiary industry as workers provide services rather than goods.

Linking them together Both tertiary and quaternary are linked to primary and secondary sectors. Ex: fishing – rely on weather forecasters for ocean conditions rely on mechanics and technicians to maintain equipment plant owners rely on marketing specialists to help find new opportunities to sell their fish

GDP and GNP GDP or Gross Domestic Product is the total value of goods and services produced within a given area in a given year. Used to measure economic growth! GNP or Gross National Product is the total value of all goods and services produced by Canada in a given year, including that of Canadian companies operating in other countries. Entrepreneurs – people who turn ideas in businesses.

Chapter 12 – Our Economic Outlook Sabian Cymbals, NB

“Trickle Down Effect”

Seasonal Work We have a resource based economy so many jobs are seasonal, where workers are employed for only part of the year.

Out migration – The Brain Drain

Transfer Payments Haves……………BC, Alberta, NL to Have Nots …………… All other provinces Equal access for all Canadians to health care and education, the 2 biggest expenditures for every province. AKA equalization payments, it negates economic diversity.

ACOA and NAFTA