Starter What is economics?

Why Study Economics? Read the following examples of possible newspaper headlines and describe how these headline events could effect you. War in the Middle East Threatens Oil Supply Cost of College Education continues to Rise Government Indicators warn of Possible Recession New Law Prevents Teens from Working more than Two days a Week Computer Related Industries experience Great Shortage in Workers Cost of Health Care continues to Spiral Upward Unions report that Many Jobs being Lost to Oversees Workers

Fundamental Economics

Economic Choices Economics is the study of how we make decisions in a world where resources are limited. It is sometimes called the science of decision making. Needs are things we need for survival, such as food, clothing, & shelter. Wants are things we would like to have.

Economic Choices (con’t) The fundamental economic problem is scarcity-we do not have enough resources to produce all the things we would like to have. Because of scarcity, we must make choices among alternatives. Three Decisions Society must make: What to produce? How to produce? For whom to produce?

Using Economic Models The economy includes all the activity in a nation that together affects the production, distribution, & use of goods & services Economic Models-representations of the real world, based on economic theories. 1. Business & gov’t often base decisions on the model’s responses to tests. 2. Model’s based on assumptions. 3. Economists use models to predict future of economy.

Trade-Offs Economic choices involve trade-offs, or exchanging one thing for the use of another. (For example, when you by a product, you exchange money for the right to own that product rather that something else you could buy for the same price.)

Trade-Off (con’t) People, businesses, & societies make trade-offs every time they chose to use their resources in one way & not in another. More money for education means less money to spend on medical research or national defense.

Needs and Wants Divide a sheet of paper in half-hotdog fold On one side write Needs. On the other write Wants On the next slide is a list of products. Place the product in the correct category (need or want) No discussion! Place according to definition given in class.

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