What is Economics? The way a community or society produces and exchanges goods and services they want.

Economics isn’t about MONEY; it is about choices we make. Economics doesn’t tell you what is right or wrong.

What is voluntary exchange and where does it occur? Market economy is the primary means of organizing and coordinating production of goods and services. Retail store Stock market Internet Restaurants Pizza delivery Babysitting Plumber, electrician, mechanic

4 basic resources are needed to produce goods and services. 1. Natural resources 1. Resources in the natural environment which can be used for the production of goods and services. (it is not considered a resource if it isn’t used for production) 2. Can be increased by discovery Mineral Oil and GasWater Wind TimberSoilSea life

2. Human resources Acquired skills and abilities workers bring to a company. 3. Capital resources Resources must have been produced Resources can be used to produce other goods and services Examples: buildingsmachinescomputers

4. Entrepreneurship Willing to take risks Innovative thinkers Start business of the future Ex: Henry Ford, Jobs, Facebook, google founders

What is scarcity? Inability to satisfy all wants (it’s hard to identify “wants” and “needs” Needs can be different for everyone.) Is the amount of resources available in relation to people’s wants Relationship between the amount of something we want and the amount that is available. A CONDITION WHICH FORCES US TO CHOOSE.

What is Opportunity Cost? The best alternative given up The most highly valued sacrificed alternative The thing you gave up to have something else Next best thing, or forgone alternative You may have many alternative BUT only one is your opportunity cost. WE ALWAYS MAKE THE BEST CHOICE AT THE TIME WE MAKE A CHOICE.

What determines opportunity costs? Alternatives Taste and value, preferences Rules of the game

What is trade off? Give up some of one thing to have more of something else. A choice between alternatives that reveals the opportunity cost of selecting one alternative over the other. SleepingSchoolHomework Hanging out

Marginal Cost and Marginal Benefits Economists often focus on the additional or extra costs of benefits of a choice. Marginal cost is the increase in total cost that results from producing and additional unit. Marginal benefit is the increase on total benefit that results from producing, purchasing, or consuming an additional unit.

Costs and Price Cost is the value a seller must give up to produce something Are born by people Are the results of actions-things have no cost Are always in the future (costs in the past have already occurred) Price is the monetary value we must pay to buy something

How do we make these choices? MBgreater than or equal toDO IT! MBless thanDO LESS!

What are the basic economic choices facing ALL societies? WHAT HOW WHO