Chapter 1: What is Economics? Opener

Slide 2 Copyright © Pearson Education, Inc.Chapter 1, Opener Essential Question How can we make the best economic choices?

Slide 3 Copyright © Pearson Education, Inc.Chapter 1, Opener Guiding Questions Section 1: Scarcity and the Factors of Production –How does scarcity force people to make economic choices? Scarcity means that people cannot acquire all of their wants so they must decide which wants are more important to them.

Slide 4 Copyright © Pearson Education, Inc.Chapter 1, Opener Scarcity and choice When did you recently want to buy something but didn’t have enough money? People’s needs and wants are unlimited Scarcity forces ppl to make choices. Scarcity Limited amounts of goods/services are available to meet unlimited wants

Slide 5 Copyright © Pearson Education, Inc.Chapter 1, Opener Scarcity and choice Unlike shortages, scarcity always exists What is the difference between shortage and scarcity? Shortage Occurs when consumers want more of a good/service than producers willing to make available at a particular price. Shortage – Gamestop selling out of GTA 5 Scarcity – Drought which caused plastic trees to die, can’t make discs now for video games.

Slide 6 Copyright © Pearson Education, Inc.Chapter 1, Opener Scarcity and Shortage Scarcity = –At a price of zero, there is not enough for everyone to have all they want –They can’t make more Shortage = –Shortage is price-determined –At current price, people want to buy more than suppliers want/are able to sell –“They can make more”

Slide 7 Copyright © Pearson Education, Inc.Chapter 1, Opener Entrepreneurs and the Factors of Production How are scarce resources turned into goods and services? Take risks Develop new ideas Start businesses Create industries Fuel growth Entrepreneur Person who decides how to combine resources to create new goods/services.

Slide 8 Copyright © Pearson Education, Inc.Chapter 1, Opener Entrepreneurs and the Factors of Production The first task facing an entrepreneur is to assemble factors of production. Land Labor Capital Factors of Production Resources that are used to make goods and services

Slide 9 Copyright © Pearson Education, Inc.Chapter 1, Opener Factors of Production- Land, Labor and Capital Land- All natural resources used to produce goods and services. –Ex: Fertile land, oil, iron, coal, water and trees Labor- The effort people devote to tasks –Ex: Salesman selling paper, assembly-line worker tightening a bolt, professor giving a lecture

Slide 10 Copyright © Pearson Education, Inc.Chapter 1, Opener Factors of Production- Land, Labor and Capital Capital- Any human-made resource that is used to produce other goods/services. Economists divide capital into two types- physical capital- human capital- human made objects used to create other goods/services Ex-warehouse, machines, trucks, conveyor belts, tools Knowledge and skills a worker gains through education and experience Ex: Architects study engineering, auto mechanics going to trade school, nurses go to nursing school etc.

Slide 11 Copyright © Pearson Education, Inc.Chapter 1, Opener Physical/Human Capital What is the physical capital? What is the human capital?

Slide 12 Copyright © Pearson Education, Inc.Chapter 1, Opener Factors of Production What does it take to make a bacon cheeseburger?

Slide 13 Copyright © Pearson Education, Inc.Chapter 1, Opener Scarce Resources Everything we just listed is scarce. All goods and services are scarce because the resource used to produce them are scarce.