Vocabulary Preview Economics Basic Economic Terminology and Economic Systems

PRINCIPLES OF ECONOMICS Society and Scarce Resources: –The management of society’s resources is important because resources are scarce. –Scarcity... means that society has limited resources and therefore cannot produce all the goods and services people wish to have. –This is the classical economic view… –What do you think of this definition? What factors does this definition leave out?

Scarcity or Allocation??

Scarcity of resources vs. allocation of resources

Factors of Production : Land, Labor, capital entrepreneurs The building blocks of capitalism

Opportunity cost: The Cost of Something Is What You Give Up to Get it. LA Laker basketball star Kobe Bryant chose to skip college and go straight from high school to the pros where he has earned millions of dollars. But Michael Jordan earned his college degree and went to the pros

Paradox of value

Utility: The amount of usefulness we get from a product or service. It tends to decline with number or reptition

Invisible hand

Factors of Production Land Labor Capital Entrepreneur

Mixed Economy (social democracy) Welfare states Generous welfare and health benefits 6 week vacation Family and medical leave Single-payer health care High tax rates

Command (communist economy): government ownership of all parts of the economy/also controls social lives of the people