What is Economics?

Vocabulary Economics Wants Needs Scarcity Resources Consumer Produce Goods Services Competition

Factors that define Economics Wants vs. Needs

Need vs. want Need: A basic requirement for survival (including food, clothing, and shelter) Want: A way of expressing a need

Examples: Need vs. Want You need to eat, but you can satisfy that need by eating a variety of foods. You need to get places, and there are several methods of getting there (new car, used car, bus, train, walk, bike)

What’s the Difference between a Need and a Want? NEEDS WANTS Those goods and services that are necessary for survival Food, clothing, shelter Those goods and services that people consume beyond what is necessary for survival

What are goods and services? Physical objects that can be purchased Pizza, bicycle, shoes Actions or activities that are performed for a fee. Lawyers, teachers, plumbers

Scarcity is the basic economic problem that faces everyone the condition that results when society does not have enough resources to produce all the things people would like to have Scarcity is the basic economic problem that faces everyone

Scarcity Illustrated: Who likes candy? Who wants candy? How do we decide who gets the candy?

Types of resources Natural resources: sunshine, rain, crude oil Human resources: labor, service Man made resources: machines, equipment

Competition We compete for the use of limited resources in 2 ways Price competition Non price competition (waiting, examination, lucky draw, violence)

Who makes the decision? Consumers – the people who decide to buy things Producers – The people who make the things that satisfy consumers’ needs and wants.

Then what is the definition? Economics is the study of how scarce productive resources are used to satisfy human’s unlimited needs.

Economics is the study of how we allocate limited resources to satisfy unlimited desire